The kinked demand curve and price rigidity: evidence from scanner data*
- Author
- Maarten Dossche, Freddy Heylen (UGent) and Dirk Van den Poel (UGent)
- Organization
- 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.
- Keywords
- 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
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Citation
Please use this url to cite or link to this publication: http://hdl.handle.net/1854/LU-1152127
- MLA
- Dossche, Maarten, et al. “The Kinked Demand Curve and Price Rigidity: Evidence from Scanner Data*.” SCANDINAVIAN JOURNAL OF ECONOMICS, vol. 112, no. 4, 2010, pp. 723–52, doi:10.1111/j.1467-9442.2010.01621.x.
- 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. https://doi.org/10.1111/j.1467-9442.2010.01621.x
- Chicago author-date
- 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): 723–52. https://doi.org/10.1111/j.1467-9442.2010.01621.x.
- Chicago author-date (all authors)
- 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. doi:10.1111/j.1467-9442.2010.01621.x.
- 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.
- IEEE
- [1]M. Dossche, F. Heylen, and D. Van den Poel, “The kinked demand curve and price rigidity: evidence from scanner data*,” SCANDINAVIAN JOURNAL OF ECONOMICS, vol. 112, no. 4, pp. 723–752, 2010.
@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}},
keywords = {{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://doi.org/10.1111/j.1467-9442.2010.01621.x}},
volume = {{112}},
year = {{2010}},
}
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