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Limit price
About: Limit price is a research topic. Over the lifetime, 4865 publications have been published within this topic receiving 148546 citations.
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TL;DR: This paper examined the behavior of individual buyers' prices for certain products used in manufacturing and found that prices are not rigid down-ward and fixed costs of changing prices at least to some buyers seem trivial.
Abstract: This paper presents evidence on the amount of price rigidity that exists in individual transaction prices Using the Stigler-Kindahi data, I examine the behavior of individual buyers' prices for certain products used in manufacturing My most important findings are: 1The degree of price rigidity in many industries is significant It is not unusual in some industries for prices to individual buyers to remain unchanged for several years 2Even for what appear to be homogeneous commodities, the correlation of price changes across buyers is very low 3There is no evidence that there is an asymmetry in price rigidity In particular, prices are not rigid down-ward 4The fixed costs of changing price at least to some buyers seem trivial There are plenty of instances where small price changes occur 5The level of industry concentration is strongly correlated with rigid prices The more concentrated the industry, the longer is the average spell of price rigidity 6There appears to be a relationship between price rigidity, size of price change, and the length of time a buyer and seller deal with each otherI interpret the findings as evidence that it is erroneous to focus attention on price as the exclusive mechanism to allocate resources Nonprice rationing is not a fiction, it is a reality of business and may be the efficient response to economic uncertainty
622 citations
TL;DR: In this article, a commonsense and empirically supported approach to explaining metropolitan real house price changes is proposed, for the theory to describe an equilibrium price level to which the market is constantly adjusting.
Abstract: A commonsense and empirically supported approach to explaining metropolitan real house price changes is for the theory to describe an equilibrium price level to which the market is constantly adjusting. The determinants of real house price appreciation, then, can be divided into two groups, one that explains changes in the equilibrium price and the other that accounts for the adjustment dynamics or changing deviations from the equilibrium price. The former group includes the growth in real income and real construction costs and changes in the real after-tax interest rate. The latter group consists of lagged real appreciation and the difference between the actual and equilibrium real house price levels. Either group of variables can explain a little over two-fifths of the variation in real house price movements in 30 cities over the 1977-92 period; together, they explain three-fifths.
576 citations
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TL;DR: The authors examined the cyclical behavior of price/marginal cost margins for U.S. manufac turing after 1956 and found that short run marginal cost is markedly procyclical.
Abstract: The author examines the cyclical behavior of price/marginal cost margins for U.S. manufac turing after 1956. Short-run marginal cost is markedly procyclical. This is primarily due to procyclical overtime payments, incurred beca use employment is not perfectly flexible. In most industries, output price fails to respond to the cyclical movement in marginal cost; so price/marginal cost margins are markedly countercyclical. The res ults contradict business cycle theories that explain low production i n a recession by a high real cost of producing; they support theories that explain low production in a recession by the inability of firms to sell their output. Copyright 1987 by American Economic Association.
554 citations
TL;DR: In this article, the authors present a new strategy for pricing average value options, i.e. options whose payoff depends on the average price of the underlying asset over a fixed period leading up to the maturity date.
Abstract: In this paper, we present a new strategy for pricing average value options, i.e. options whose payoff depends on the average price of the underlying asset over a fixed period leading up to the maturity date. Such options are of particular interest and importance for thinly-traded assets (e.g. crude oil), since price manipulation is inhibited, and both the investor and issuer enjoy a welcome degree of protection from the vagaries of the market. These options are often implicit in a bond contract, although they also appear in a straightforward form. Our results suggest that the price of an average-value option will always be lower than that of a standard European option. Our pricing strategy involves Monte Carlo simulation with variance reduction elements and offers an enhanced pricing method to both arbitragers and hedgers, as well as to the issuers of such bonds.
535 citations
TL;DR: This article used newsstand prices of American magazines to investigate the determinants of the frequency of nominal price change and concluded that higher inflation leads to more frequent price adjustment and that the real cost of price changes varies with the size of a real price change.
519 citations