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: In this article, the authors analyzed the results of a survey conducted by the Banco de Portugal between May and September 2004 on a sample of 1370 Portuguese firms with the main purpose of investigating their price setting behavior.
Abstract: This paper analyses the results of a survey conducted by the Banco de Portugal between May and September 2004 on a sample of 1370 Portuguese firms with the main purpose of investigating their price setting behaviour. The evidence points to the presence of a considerable degree of price stickiness: most firms do not review or change their prices more than once a year; time lags in price reactions to cost and demand shocks were found to be significant; and slightly more than half of the firms follow time-dependent price reviewing, though only one-third stick to this practice after the occurrence of specific shocks. The degree of price stickiness seems to be higher in services than in manufacturing. The presence of implicit contracts between firms and their customers under which the former pledge to stabilise their prices as a way to increase customers’ loyalty is apparently the main reason that prevents firms from changing their prices more promptly. Other relevant sources of price stickiness were also found: coordination problems arising from the preference of firms not to change their prices unless their competitors do so, the constraint imposed by a high proportion of fixed costs, marginal costs that vary little when costs are an important determinant in firms’ pricing decisions or the presence of formal contracts that are costly to renegotiate. In contrast, alternative explanations such as the existence of menu costs, the preference of firms to quote their prices according to certain thresholds and the costs of collecting the relevant information for pricing decisions were not considered very important.
87 citations
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TL;DR: In this article, the authors developed an empirical model that also included crop inventory adjustments, a factor that is underemphasized in the literature, and showed that if inventory effects are not taken into account, the impacts of the various factors on food commodity price inflation would be overestimated.
Abstract: The food commodity price inflation beginning in 2001 and culminating in the food crisis of 2007/08, and which returned in 2010, reflects a combination of several factors including economic growth, biofuel expansion, exchange rate fluctuations, and energy price inflation. To quantify these influence we developed an empirical model that also included crop inventory adjustments, a factor that is underemphasized in the literature. The study shows that, if inventory effects are not taken into account, the impacts of the various factors on food commodity price inflation would be overestimated. Although our model explains most of the price fluctuation observed in 2001–2011, it is not able to explain all of it. Other factors, such as speculation, trade policy and weather shocks, which are not included in the analysis, might be responsible for the remaining contribution to the food commodity price increase.
87 citations
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TL;DR: In this article, a conceptual model of consumer response to different types of price-matching characteristics (i.e., refund depth, length, and scope) across consumer segments with varying levels of price consciousness was developed and tested.
86 citations
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TL;DR: In this paper, the authors focus on the relationship between price adjustment in response to changes in economic conditions and industrial market structure and propose a synthesis between the long-standing "administered prices" hypothesis, and the recent theories associated with the "new view" of Keynes.
Abstract: The present thesis is concerned with the relationship between price
adjustments in response to changes in economic conditions and industrial
market structure. Its point of departure consists of abandoning the time-honoured
assumption that firms in industrial markets act as if they were
price takers. Instead, attention is focused on the determinants of price
adjustment in a more realistic industrial setting.
Following the introductory analysis, a synthesis is proposed
between the long-standing "administered prices" hypothesis, and the recent
theories associated with the "new view" of Keynes. It is suggested that
both approaches have common theoretical underpinnings which are themselves
closely related to this thesis.
The main body of analysis consists of a theoretical and an empirical
investigation. In the theoretical section, two distinct aspects of the
price adjustment decision are examined. The first concerns the comparative
statics of adjustment and involves an analysis of the factors which determine
the magnitude of price adjustments following changes in cost and demand.
Moreover, the influence of market structure on the adjustment process is
examined through its impact on the costs of search which are associated with
the pricing decision. The second, and no less important aspect of the
theoretical investigation concerns the dynamics of price adjustment. The
object of this analysis is to assess the impact of market structure on the
rate of price adjustment over time.
The two hypotheses developed in the theoretical section are put to
extensive empirical testing. The quantitative analysis involves mainly
time-series and cross-section regressions, but other statistical techniques
such as rank correlation and covariance tests are also employed.
The first of these hypotheses is that price adjustments in response
to short-run changes in demand could be attenuated relative to those occasioned by changes in marginal costs. The rationale for this asymmetry
is based on the unequal impact of search costs. The empirical findings,
whilst by no means conclusive, do not contradict this view.
The second hypothesis suggests that a high degree of industrial
concentration will be associated with high rates of price adjustment. This
is because concentration facilitates the process of dynamic co-ordination
amongst firms by reducing the costs of search. The empirical results come
out strongly in favour of this hypothesis. The consequential implications
regarding "administered prices" and the management of inflation are explored
in the concluding chapter of this thesis.
86 citations
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TL;DR: Chaiken et al. as discussed by the authors investigated consumer decisions concerning price search using the heuristic-systematic model of social judgment and found that consumers used the size of the percentage discount as a heuristic cue to help decide whether a better price was likely to be available elsewhere.
Abstract: Consumer decisions concerning price search were investigated using the heuristic-systematic model of social judgment (S. Chaiken, A. Liberman, & A. H. Eagly, 1989 ). Consumers used the size of the percentage discount as a heuristic cue to help decide whether a better price was likely to be available elsewhere. However, as predicted, participants relied on this cue only when the initial base price of the item was low. In contrast, search was continued despite the offer ofa large percentage discount when consumers were shopping for items that were relatively expensive. This finding was attributed to the higher potential costs associated with missing a better price when consumers were shopping for more expensive items. In general, the heuristic-systematic model proved to be a useful way to characterize price search decisions. It was also suggested that these findings might be useful in explaining some conflicting results in the price search literature. Implications for behavioral price theories are also discussed.
86 citations