Inflation, Price Dispersion, and Market Structure

Mustafa Caglayan (), Alpay Filiztekin and Michael Rauh ()

No 2006-03, Working Papers from Indiana University, Kelley School of Business, Department of Business Economics and Public Policy

Abstract: In this paper, we use a unique micro-level data set from Istanbul to investigate the empirical relationship between inflation and price dispersion. In particular, our data set includes price observations from three distinct store types: bakkals (convenience stores), pazars (bazaars), and supermarkets. Our findings indicate that pazars exhibit the least amount of price dispersion on average, which is consistent with the fact that menu and search costs are very low in the pazar and that such sellers seem to have very little market power. Moreover, we find that several of the basic inflation-dispersion channels identified by the theoretical literature seem to be operating in our data.

Keywords: inflation; market structure; menu cost models; micro panel data; price dispersion (search for similar items in EconPapers)
JEL-codes: C23 D40 D83 E31 L0 (search for similar items in EconPapers)
Date: 2006-01
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (14)

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http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bep ... -filiztekin-rauh.pdf (application/pdf)

Related works:
Journal Article: Inflation, price dispersion, and market structure (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:iuk:wpaper:2006-03

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