Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152882
Authors: 
Aucremanne, Luc
Druant, Martine
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 448
Abstract: 
This paper reports the results of an ad hoc survey on price-setting behaviour conducted in February 2004 among 2,000 Belgian firms. The reported results clearly deviate from a situation of perfect competition and show that firms have some market power. Pricing-to-market is applied by a majority of industrial firms. Prices are rather sticky. The average duration between two consecutive price reviews is 10 months, whereas it amounts to 13 months between two consecutive price changes. Most firms adopt time-dependent price reviewing under normal circumstances. However, when specific events occur, the majority will adopt a state-dependent behaviour. Evidence is found in favour of both nominal (mainly implicit and explicit contracts) and real rigidities (including flat marginal costs and counter-cyclical movements in desired mark-ups). The survey results point to a non-negligible degree of non-optimal price-setting.
Subjects: 
nominal rigidity
price rigidity
price-setting behaviour
pricing-to-market
real rigidity
state-dependent pricing
survey
timedependent pricing
JEL: 
D40
E31
L11
Document Type: 
Working Paper

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