The mechanics of price adjustment: New evidence on the (Un)importance of menu costs

Chakrabarti, R and Scholnick, B (2007) The mechanics of price adjustment: New evidence on the (Un)importance of menu costs. Managerial and Decision Economics, 28 (7). pp. 657-668.

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Abstract

This paper examines nominal price rigidities in an environment, e-commerce, where literal menu costs can be assumed not to exist. We argue that if we can empirically show that nominal rigidities do still exist in the e-commerce environment, then it implies that other kinds of costs besides menu costs, such as management costs, must be causing these nominal rigidities. This evidence is of importance because of the central role that menu costs play in Keynesian macroeconomics. In this paper we examine the price changing behavior of two leading online booksellers - Amazon.com and BarnesandNoble.com - and find strong evidence that nominal price rigidities do indeed persist on the Internet.

ISB Creators:
ISB CreatorsORCiD
Chakrabarti, RUNSPECIFIED
Item Type: Article
Uncontrolled Keywords: e-commerce environment ; Amazon.com ; BarnesandNoble.com ; Keynesian macroeconomics ; online booksellers ; price rigidities
Subjects: Business and Management
Depositing User: Ilammaran A
Date Deposited: 06 Nov 2014 15:18
Last Modified: 07 Nov 2014 05:25
URI: http://eprints.exchange.isb.edu/id/eprint/206
Publisher URL: http://dx.doi.org./10.1002/mde.1374
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/0143-6570/
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