Topic
Factor price
About: Factor price is a research topic. Over the lifetime, 2764 publications have been published within this topic receiving 86176 citations.
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TL;DR: The authors examined consumers' price sensitivity using a new approach that incorporates probabilistic thresholds for price gains and price losses in the reference price models and found that higher own-price volatility makes consumers more sensitive to gains and less sensitive to losses.
299 citations
TL;DR: This article developed a model of household demand for frequently purchased consumer goods that are branded, storable and subject to stochastic price fluctuations and found that long run cross price elasticities of demand are more than twice as great as short-run cross-price elasticities.
Abstract: We develop a model of household demand for frequently purchased consumer goods that are branded, storable and subject to stochastic price fluctuations. Our framework accounts for how inventories and expectations of future prices affect current period purchase decisions. We estimate our model using scanner data for the ketchup category. Our results indicate that price expectations and the nature of the price process have important effects on demand elasticities. Long-run cross price elasticities of demand are more than twice as great as short-run cross price elasticities. Temporary price cuts (or “deals”) primarily generate purchase acceleration and category expansion, rather than brand switching.
299 citations
TL;DR: In this article, the authors examined the determinants of list price changes and found evidence consistent with the theory of pricing behavior under demand uncertainty, and explored the impact of missing price change information on estimating a representative model of house price and market time.
Abstract: Information about price changes during a home’s marketing period is typically missing from data used to investigate the listing price, selling price, and selling time relationship. This paper incorporates price revision information into the study of this relationship. Using a maximum-likelihood probit model, we examine the determinants of list price changes and find evidence consistent with the theory of pricing behavior under demand uncertainty. Homes most likely to undergo list price changes are those with high initial markups and vacant homes, while homes with unusual features are the least likely to experience a price revision. We also explore the impact of missing price change information on estimating a representative model of house price and market time. Our results suggest that mispricing the home in the initial listing is costly to the seller in both time and money. Homes with large percentage changes in list price take longer to sell and ultimately sell at lower prices.
299 citations
TL;DR: In this article, the authors reviewed the role of price setting in business cycles and concluded that prices change at least once a year, with temporary price discounts and product turnover often playing an important role.
Abstract: The last decade has seen a burst of micro price studies. Many studies analyze data underlying national CPIs and PPIs. Others focus on more granular subnational grocery store data. We review these studies with an eye toward the role of price setting in business cycles. We summarize with ten stylized facts: prices change at least once a year, with temporary price discounts and product turnover often playing an important role. After excluding many short-lived prices, prices change closer to once a year. The frequency of price changes differs widely across goods, however, with more cyclical goods exhibiting greater price flexibility. The timing of price changes is little synchronized across sellers. The hazard (and size) of price changes does not increase with the age of the price. The cross-sectional distribution of price changes is thick-tailed, but contains many small price changes too. Finally, strong linkages exist between price changes and wage changes.
295 citations
TL;DR: In this paper, the authors incorporate 15,588 households from the U.S. Consumer and Expenditure Survey data as individual agents in a comparative-static general equilibrium framework and provide detailed within-group distributional measures of burden impacts from various policy scenarios.
290 citations