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The kinked demand curve and price rigidity: evidence from scanner data*

Maarten Dossche, Freddy Heylen UGent and Dirk Van den Poel UGent (2010) SCANDINAVIAN JOURNAL OF ECONOMICS. 112(4). p.723-752
abstract
We estimate the curvature of the demand curve for a wide range of products. We use an extension of Deaton and Muellbauer's Almost Ideal Demand System and scanner data from a large euro area retailer. We find evidence that the overall price elasticity of demand is higher for price increases than for price decreases. However, the overall degree of curvature is one to two orders of magnitude smaller than the value economists usually impose. This suggests that the shape of the demand curve is unlikely to be the only source of real price rigidity.
Please use this url to cite or link to this publication:
author
organization
year
type
journalArticle (original)
publication status
published
subject
keyword
Almost Ideal Demand System, C33, real price rigidity, Price setting, UNITED-STATES, REAL RIGIDITIES, BUSINESS CYCLES, E3, D12, MODELS, EURO AREA, COMPETITION, ELASTICITIES, INFLATION, DYNAMICS, SYSTEM
journal title
SCANDINAVIAN JOURNAL OF ECONOMICS
Scand. J. Econ.
volume
112
issue
4
pages
723 - 752
Web of Science type
Article
Web of Science id
000284274500005
JCR category
ECONOMICS
JCR impact factor
0.919 (2010)
JCR rank
123/301 (2010)
JCR quartile
2 (2010)
ISSN
0347-0520
DOI
10.1111/j.1467-9442.2010.01621.x
language
English
UGent publication?
yes
classification
A1
copyright statement
I have transferred the copyright for this publication to the publisher
id
1152127
handle
http://hdl.handle.net/1854/LU-1152127
date created
2011-02-15 16:19:19
date last changed
2015-06-17 09:26:06
@article{1152127,
  abstract     = {We estimate the curvature of the demand curve for a wide range of products. We use an extension of Deaton and Muellbauer's Almost Ideal Demand System and scanner data from a large euro area retailer. We find evidence that the overall price elasticity of demand is higher for price increases than for price decreases. However, the overall degree of curvature is one to two orders of magnitude smaller than the value economists usually impose. This suggests that the shape of the demand curve is unlikely to be the only source of real price rigidity.},
  author       = {Dossche, Maarten and Heylen, Freddy and Van den Poel, Dirk},
  issn         = {0347-0520},
  journal      = {SCANDINAVIAN JOURNAL OF ECONOMICS},
  keyword      = {Almost Ideal Demand System,C33,real price rigidity,Price setting,UNITED-STATES,REAL RIGIDITIES,BUSINESS CYCLES,E3,D12,MODELS,EURO AREA,COMPETITION,ELASTICITIES,INFLATION,DYNAMICS,SYSTEM},
  language     = {eng},
  number       = {4},
  pages        = {723--752},
  title        = {The kinked demand curve and price rigidity: evidence from scanner data*},
  url          = {http://dx.doi.org/10.1111/j.1467-9442.2010.01621.x},
  volume       = {112},
  year         = {2010},
}

Chicago
Dossche, Maarten, Freddy Heylen, and Dirk Van den Poel. 2010. “The Kinked Demand Curve and Price Rigidity: Evidence from Scanner Data*.” Scandinavian Journal of Economics 112 (4): 723–752.
APA
Dossche, M., Heylen, F., & Van den Poel, D. (2010). The kinked demand curve and price rigidity: evidence from scanner data*. SCANDINAVIAN JOURNAL OF ECONOMICS, 112(4), 723–752.
Vancouver
1.
Dossche M, Heylen F, Van den Poel D. The kinked demand curve and price rigidity: evidence from scanner data*. SCANDINAVIAN JOURNAL OF ECONOMICS. 2010;112(4):723–52.
MLA
Dossche, Maarten, Freddy Heylen, and Dirk Van den Poel. “The Kinked Demand Curve and Price Rigidity: Evidence from Scanner Data*.” SCANDINAVIAN JOURNAL OF ECONOMICS 112.4 (2010): 723–752. Print.