Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96037
Authors: 
Sherman, Joshua
Weiss, Avi
Year of Publication: 
2012
Series/Report no.: 
Working Papers, Bar-Ilan University, Department of Economics 2012-13
Abstract: 
We compare predictions from a theoretical model based on the structure of the main outdoor retail market in Jerusalem with the results of an empirical analysis of price response to changes in cost. We find that firms without adjacent competition exhibit both upward and downward price rigidity, an outcome we ascribe to asymmetric information between the consumer and the firm. Given that previous studies have focused on downward price rigidities of firms with market power, our findings highlight the importance of accounting for transitory information asymmetries between the consumer and the firm when studying price rigidity.
Subjects: 
price response
price rigidity
information asymmetry
market power
JEL: 
L11
L13
Document Type: 
Working Paper

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