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Price Rigidity and Multi-Market Oligopoly
Faculty of Economics, University of Tokyo.
1993 (English)Report (Other academic)
Abstract [en]

This paper presents an explanation of imperfect adjustment of prices to current market conditions, based on multi-market oligopoly. In the regime where firms re-determine prices non-cooperatively in at least one market before market conditions are fully revealed, they increase the pre-determined prices more than otherwise because the increase induces the competitors' raising non-committed prices. Since all firms have the same incentive, prices and profits are higher through a "price-price spiral." Thus, oligopolistic firms are likely to agree in the pre-determined-price regime, where pre-determined prices do not fully reflect current conditions.

Place, publisher, year, edition, pages
Stockholm: IIES , 1993. , 46 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 545
National Category
URN: urn:nbn:se:su:diva-41864OAI: diva2:338039
Published in connection with a visit at the IIES.Available from: 2010-08-10 Created: 2010-08-10 Last updated: 2010-08-10

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