On Inflation and Output with Costly Price Changes: A Simple Unifying Result

Bénabou, Roland; Konieczny, Jerzy

doi:10.3386/t0135

Cited by 24 publications

(23 citation statements)

References 7 publications

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“…This derivation is related to those of Benabou and Konieczny (1994) in a very different setup. Goodfriend (1997) makes a similar case for positive inflation in a model in which there is a "zone of indeterminacy" for the average markup.…”

Section: Relative-price Distortions From Inflationmentioning

confidence: 99%

The New Neoclassical Synthesis and the Role of Monetary Policy

Goodfriend¹,

King²

1997

NBER Macroeconomics Annual

558

315

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Section: Relative-price Distortions From Inflationmentioning

confidence: 99%

The New Neoclassical Synthesis and the Role of Monetary Policy

Goodfriend¹,

King²

1997

NBER Macroeconomics Annual

558

315

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“…The literature on menu costs, e.g. Barro (1972) or Benabou and Konieczny (1994), studied how posted prices respond to changing market conditions.…”

Section: Posted Price Mechanismmentioning

confidence: 99%

Value and liquidity under changing market conditions

Anglin

2006

Journal of Housing Economics

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Papers studying the liquidity of a market tend to focus on decisions involving the trade-off between the selling price and the time-till-sale for a given set of market conditions. This paper characterizes the effect of a change in market conditions on a single seller, where seller benefits from either a "value-increasing" or a "liquidityincreasing" change in market conditions. Shamelessly stealing from demand theory, I show how the effect of either type of change on price and on the probability-of-sale can be decomposed into a "value effect" and a "substitution effect." Two adding-up conditions restrict the set of possible predictions.The discussion focusses on the market for real estate assets where stochastic rationing is most evident, especially in the discussion of empirical implications. Even so, the same ideas can be applied to markets where other selling mechanisms dominate and, for this reason, I offer a general theory of how individual behavior adjusts to changing conditions. JEL: C70, D40, R31

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“…Note J(p) is constant over time and known to consumers. Given J(p), the optimal strategy for consumers is determined by a reservation price, r: a consumer continues searching until she/he finds a price no greater than r. 6 If r denotes the lowest price observed to date, 4 See Caplin and Spulber [1987] for a proof. Bénabou [1989] shows if firms follow a randomized (S, s) strategy to limit storage by speculators, then any initial distribution of real prices converges to the log uniform steady-state distribution.…”

Section: Consumers' Searchmentioning

confidence: 99%

“…5 For a dynamic version of noisy sequential search model, see Burdett and Coles [1997]. 6 Implicit here is that the first sample is free so that all consumers carry out the searching activity whenever they have willingness to purchase. Recall problems are irrelevant once resources spent on search are assumed to be negligible relative to consumers' income.…”

Section: Consumers' Searchmentioning

confidence: 99%

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Inflation, Price Competition, and Consumer Search Technology

Watanabe

2006

SSRN Journal

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This paper studies an (S, s) pricing model from the perspective of inflation and price competition in search markets. I present a model in which consumers' search technologies can influence firms' price setting, price dispersion, and the market structure. The result shows that although price competition among firms is more intensified in markets where consumers' search technologies are more efficient, price inflation is counter-intuitively, more likely to increase monopoly power of firms and to stimulate entry in these markets. The model also provides new empirical implications for firms' price setting behaviors. JEL Classification Number: E31; D43; D83; L13

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On Inflation and Output with Costly Price Changes: A Simple Unifying Result

Cited by 24 publications

References 7 publications

The New Neoclassical Synthesis and the Role of Monetary Policy

The New Neoclassical Synthesis and the Role of Monetary Policy

Value and liquidity under changing market conditions

Inflation, Price Competition, and Consumer Search Technology

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