Review of theoretical and empirical studies on price rigidity

Обзор теоретических и эмпирических исследований по жесткости цен

Dzhaokhadze, Elena (Джаохадзе, Елена) () and Sinelnikova-Muryleva, Elena (Синельникова-Мурылева, Елена) ()
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Dzhaokhadze, Elena (Джаохадзе, Елена): The Russian Presidential Academy of National Economy and Public Administration
Sinelnikova-Muryleva, Elena (Синельникова-Мурылева, Елена): The Russian Presidential Academy of National Economy and Public Administration

Working Papers from Russian Presidential Academy of National Economy and Public Administration

Abstract: There is a limited number of studies that compare pricing factors used in empirical studies based on daily/weekly/monthly data and that relate pricing factors to theories of price rigidity. Therefore, the review of theoretical and empirical studies on price rigidity is topical. The main subject of the study is the price rigidity of consumer goods. The main aim of this work is review of theoretical and empirical studies on price rigidity. To achieve this goal, such tasks as overview of the main theories of price rigidity and pricing models, overview of the main approaches to analyzing price rigidity, overview of the pricing factors most used in the empirical literature, correlation of pricing factors and theories of price rigidity have been performed. The obtained results of the theoretical and empirical review indicate the great attention that the economic community pays to the study of the properties of prices, including their rigidity, both on macrodata and microdata. The main conclusion of the study is that due to the difficulty of measuring theoretical pricing factors, not all theories of price stickiness can be tested using econometric methods. In particular, of the twelve most common explanations of the phenomenon of price stickiness, only four have a clear connection with the empirical studies reviewed: the attractive price theory, the price-based quality theory, the coordination failure theory, and the fixed contract theory. The scientific novelty of the work lies in finding a correspondence between the theoretical factors of price rigidity and empirical approaches to analyzing price rigidity. The study's recommendation is to use online price data to better understand the nature of price stickiness.

Keywords: price rigidity; pricing factors; pricing models; menu costs. (search for similar items in EconPapers)
JEL-codes: D21 D40 E30 E31 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2023
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