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on Industrial Organization |
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Issue of 2005‒09‒17
three papers chosen by |
| By: | Claudia Kwapil (Oesterreichische Nationalbank, Economic Analysis Division, Otto-Wagner-Platz 3, POB 61, 1011 Vienna, Austria); Josef Baumgartner (Austrian Institute of Economic Research (WIFO), Arsenal Objekt 20, POB 91, 1103 Vienna, Austria); Johann Scharler (Oesterreichische Nationalbank, Economic Analysis Division, Otto-Wagner-Platz 3, POB 61, 1011 Vienna, Austria) |
| Abstract: | This paper explores the price-setting behavior of Austrian firms based on survey evidence. Our main result is that customer relationships are a major source of price stickiness in the Austrian economy. We also find that the majority of firms in our sample follows a timedependent pricing strategy. However, a substantial fraction of firms deviates from time-dependent pricing in the case of large shocks and switches to a state-dependent pricing strategy. In addition, we present evidence suggesting that the price response to various shocks is subject to asymmetries. |
| Keywords: | Price-setting behavior; Price rigidity |
| JEL: | C25 E30 |
| Date: | 2005–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:onb:oenbwp:100&r=ind |
| By: | Silvia Fabiani (BANK OF ITALY); Angela Gattulli (BANK OF ITALY); Roberto Sabbatini (BANK OF ITALY); Giovanni Veronese (BANK OF ITALY) |
| Abstract: | This paper investigates the microeconomic behaviour of consumer prices in Italy using the individual price records underlying the Italian CPI dataset collected by Istat. We discuss how to analyse price stickiness using such a detailed database and compute a quantitative measure of the unconditional degree of price rigidity in the Italian economy. The analysis focuses on the monthly frequency of price changes and on the duration of price spells, with a sectoral breakdown as well as with a classification by type of outlet. Prices are in general found to be rather sticky, remaining unchanged on average for around 10 months; price spells last longer for non-energy industrial goods and services, much less for energy products. Prices are revised more frequently upwards than downwards, while the size of price changes is quite symmetric. Price st ickiness is found to be less marked in large modern stores than in smaller traditional shops. Price changes display considerable synchronisation, in particular in the services sector. The average frequency of price changes and the probability of observing a price change over time and across items are positively related to headline inflation and increases in VAT rates and negatively related to the share of attractive prices. These findings are consistent with the ones reported in similar national studies for other countries of the euro area, which were conducted by the National Central Banks within the Eurosystem Inflation Persistence Network. |
| Keywords: | consumer prices, nominal rigidity, frequency of price change |
| JEL: | D21 D40 E31 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_556_05&r=ind |
| By: | Felici Roberto (BOLOGNA); Pagnini Marcello (BOLOGNA) |
| Abstract: | We examine the determinants of entry into Italian local banking markets during the period 1991-2002 and build a simple model in which the probability of branching in a new market depends on the features of both the local market and the potential entrant. Our econometric findings show that, all else being equal, banks are more likely to expand into those markets that are closest to their pre-entry locations. We also find that large banks are more able to cope with distance-related entry costs than small banks. Finally, we show that banks have become increasingly able to open branches in distant markets, probably due to the advent of information and communication technologies. |
| Keywords: | entry, barriers to entry, local banking markets, geographical distance. |
| JEL: | G21 L13 L22 R30 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_557_05&r=ind |