Price Adjustment with Price Conjectures

Michael Olive

No 131, Econometric Society 2004 Australasian Meetings from Econometric Society

Abstract: We derive a measure of firm speed of price adjustment that is directly inversely related to market power and compare this to the measure derived by Martin (1993). However, both measures are incorrect when firms have price conjectural variations. This is because Taylor expansions of the demand function implicitly assume that firms influence the level of competing prices in a way that is consistent with their conjectures

Keywords: Price adjustment; market power; conjectural variations (search for similar items in EconPapers)
JEL-codes: D43 L13 L16 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-ind and nep-mic
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