Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155527
Authors: 
Ellison, Sara
Snyder, Christopher M.
Zhang, Hongkai
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6285
Abstract: 
We study price dynamics for computer components sold on a price-comparison website. Our fine-grained data—a year of hourly price data for scores of rival retailers—allow us to estimate a dynamic model of competition, backing out structural estimates of managerial frictions. The estimated frictions are substantial, concentrated in the act of monitoring market conditions rather than entering a new price. We use our model to simulate the counterfactual gains from automated price setting and other managerial changes. Coupled with supporting reduced-form statistical evidence, our analysis provides a window into the process of managerial price setting and the microfoundation of pricing inertia, issues of growing interest in industrial organization and macroeconomics.
JEL: 
L11
C73
D21
L81
Document Type: 
Working Paper

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