Asymmetric Price Adjustment And Consumer Search
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Asymmetric Price Adjustment And Consumer Search
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Author : Matthew S. Lewis
language : en
Publisher:
Release Date : 2011
Asymmetric Price Adjustment And Consumer Search written by Matthew S. Lewis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
This article proposes a new explanation for why retail prices respond more quickly to cost increases than cost decreases. I develop a search model that assumes consumers' expectations of prices are based on prices observed during previous purchases. This model predicts that consumers search less when prices are falling, which results in higher profit margins and a slower price response to cost changes. I then empirically examine patterns of retail gasoline price response and price dispersion to show that this model predicts observed price behavior better than previously suggested explanations.
Business As Usual
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Author : Luís M. B. Cabral
language : en
Publisher:
Release Date : 2011
Business As Usual written by Luís M. B. Cabral and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Essays On Price Dynamics And Consumer Search
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Author : Matthew Stephen Lewis
language : en
Publisher:
Release Date : 2004
Essays On Price Dynamics And Consumer Search written by Matthew Stephen Lewis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with categories.
When Do Consumers Search
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Author : Matthew S. Lewis
language : en
Publisher:
Release Date : 2011
When Do Consumers Search written by Matthew S. Lewis and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
This paper provides empirical evidence relating search to price movements. We measure consumer search directly from traffic statistics for web sites that report gasoline prices. We show empirically that consumers search more as prices rise than they do when prices fall. Asymmetric search patterns have consequences for price behavior. Our findings indicate that retail margins are squeezed by increased search. In addition, we show that there is more price dispersion when prices are falling than when prices are either stable or rising. Our results provide a search-based explanation for the 'rockets and feathers' phenomenon of asymmetric price adjustment.
Price Match Announcements In A Consumer Search Duopoly
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Author : Aleksandr Yankelevich
language : en
Publisher:
Release Date : 2016
Price Match Announcements In A Consumer Search Duopoly written by Aleksandr Yankelevich and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Using a model of sequential search, we show that announcements to price-match raise prices by altering consumer search behavior. First, price-matching diminishes firms' incentives to lower prices to attract consumers who have no search costs. Second, for consumers with positive search costs, price-matching lowers the marginal benefit of search, inducing them to accept higher prices. Finally, price-matching can lead to asymmetric equilibria where one firm runs fewer sales and both firms tend to offer smaller discounts than in a symmetric equilibrium. Price increases grow in the proportion of consumers who invoke price-matching guarantees and in the level of equilibrium asymmetry.
Asymmetric Price Adjustment And Economic Fluctuations
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Author : Laurence M. Ball
language : en
Publisher:
Release Date : 1992
Asymmetric Price Adjustment And Economic Fluctuations written by Laurence M. Ball and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Inflation (Finance) categories.
Consumer Search Price Dispersion And Asymmetric Pricing
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Author : Mariano Emilio Tappata
language : en
Publisher:
Release Date : 2006
Consumer Search Price Dispersion And Asymmetric Pricing written by Mariano Emilio Tappata and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Consumer behavior categories.
In Chapter I, I explore the theoretical implications of consumer search on price dynamics. Previous empirical work established that in most markets "prices rise like rockets but fall like feathers." I show that a model with competitive firms and rational partially-informed consumers can generate such asymmetric response to costs by firms. In contrast to public opinion and past work, collusion is not necessary to explain such stylized fact.
Asymmetric Price Adjustment In The Small
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Author : Haipeng (Allan) Chen
language : en
Publisher:
Release Date : 2012
Asymmetric Price Adjustment In The Small written by Haipeng (Allan) Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
Analyses of a large retail scanner price data set reveal a new and surprising regularity - small price increases occur more frequently than small price decreases for price changes of up to 10 cents. That is, we find asymmetric price adjustment quot;in the small.quot; Furthermore, it turns out that inflation offers only a partial explanation for the finding. Indeed, substantial proportion of the asymmetry remains unexplained, even after accounting for the inflation. For example, the asymmetry holds also after excluding periods of inflation from the data, and even for products whose price had not increased. The findings hold for different aggregate and disaggregate measures of inflation and also after allowing for lagged price adjustments.
Three Essays On Consumer Search Behaviour In Experimental Market Environments
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Author : Changxia Ke
language : en
Publisher:
Release Date : 2010
Three Essays On Consumer Search Behaviour In Experimental Market Environments written by Changxia Ke and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Consumer behavior categories.
This thesis investigates consumer search behavior in different contexts and its implications on certain market outcomes. It consists of three self-contained essays. Part one investigates if people search optimally and how price promotions (such as the provision of price discounts) influence search intensity and risk-taking behavior. We start with a typical sequential search task in a finite time horizon (with exogenously determined price dispersion) as the baseline treatment. In the two experimental treatments, exogenous discounts are introduced to the search process. The treatments differ in the amount of information on the discounts revealed to the subjects. Subjects' search behavior is roughly consistent with optimality for a risk-neutral agent, but significantly influenced by the introduction of discount vouchers. We find that subjects' search intensity is significantly reduced if they are in a shop that offers discounts, even when the monetary benefit induced by the discount has been taken into account. This suggests that people seem to gain extra non-monetary utility from buying a discounted product. Alternatively, subjects might overestimate the value of a discount. Following the findings in part one, we focus on price-framing effects of discounts on consumer search behavior in part two. In order to isolate the price-framing effect from all other possible influences, we adopt an extremely simple two-shop search model in which a consumer who sees the price for an item in a shop has to decide either to buy it or to incur a search cost to learn the ex-ante uncertain price in a second shop. The experiment is designed such that a rational buyer should make identical decisions in the base treatment (where prices are posted as net prices in both shops) and in the experimental treatments (where the price in one of the shops is framed as a gross price with a discount, holding the net-price constant). Using structural estimation of the observed risk preferences, we find that people tend to be more risk-averse and hence buy from the initial shop more often in the discount treatments, regardless of where the discount is offered. The seemingly trivial change to a discount-framing increases the complexity of the decision problem. Subjects reveal a tendency to stick with the comparatively less complex options more frequently as the complexity of the decision problem increases. However, this bias declines with experience, as subjects become more and more familiar with the framing. In part three, we study search behavior in a market experiment, where prices are determined endogenously by human players. More specifically, we examine the behavioral factors and the underlying mechanism which drive the widely observed asymmetric price adjustment to cost shocks (in a world with costly search behavior and information asymmetry). We show that price dispersion, as well as asymmetric price adjustment to cost shocks, arises in experimental markets, even though the standard theory predicts neither. We find that after controlling all the potential theoretical factors, the observed price dispersion can be explained by the presence of bounded rational play. Under price dispersion, asymmetric price adjustment arises naturally, as it is harder for buyers to learn that a negative cost shock has taken place. Learning is much quicker after a positive shock.
Is Price Adjustment Asymmetric
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Author : Michael Knetter
language : en
Publisher:
Release Date : 1992
Is Price Adjustment Asymmetric written by Michael Knetter and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1992 with Exports categories.
The theoretical literature on pricing-to-market has identified two possible reasons why the elasticity of prices to exchange rate changes may be asymmetric across appreciations and depreciations. If firms are attempting to increase market shares in foreign markets subject to the possibility of trade restrictions, then more pricing-to-market may occur during appreciations of the exporter's currency. If firms face capacity constraints in their distribution networks, then pricing-to-market may be exaggerated during periods of depreciation of the exporters currency. This paper uses panel data on German and Japanese 7-digit industry exports to compare these competing explanations for asymmetries in pricing-to-market behavior. While the data seldom reject the null hypothesis of a symmetric response of prices to exchange rates, some industries, notably automobiles, provide empirical support for the market share model. Only a pooled regression with Japanese data supports the marketing bottlenecks model.