Small price changes and menu costs

Saul Lach, Daniel Tsiddon

Research output: Contribution to journalReview articlepeer-review

Abstract

We And that while some individual price changes are indeed 'small', the average price change of different products within a store in any given month is not. Moreover, the smaller the price change of an individual product, the larger the average price change of the remaining products sold by the store. We argue that these findings are consistent with extensions of menu cost models of price-setting behavior to multiproduct firms when these firms have high average costs and low marginal costs of changing prices.

Original languageEnglish
Pages (from-to)649-656
Number of pages8
JournalManagerial and Decision Economics
Volume28
Issue number7
DOIs
StatePublished - Oct 2007

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