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Identifier to cite or link to this item: https://hdl.handle.net/10086/17562

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Title
Real Rigidities: Evidence from an Online Marketplace
Creator
Creator Name
Mizuno, Takayuki Mizuno, Takayuki
水野, 貴之 水野, 貴之
ミズノ, タカユキ ミズノ, タカユキ
Affiliation
Affiliation Name
Hitotsubashi University
Creator Name
Nirei, Makoto Nirei, Makoto
楡井, 誠 楡井, 誠
ニレイ, マコト ニレイ, マコト
Affiliation
Affiliation Name
Hitotsubashi University
Creator Name
Watanabe, Tsutomu Watanabe, Tsutomu
渡辺, 努 渡辺, 努
Affiliation
Affiliation Name
Hitotsubashi University
Editor
Contributor Name
日本経済の物価変動ダイナミクスの解明 = Understanding Inflation Dynamics of the Japanese Economy
Key Word
price stickiness
real rigidities
strategic complementarities in price setting
time-dependent pricing
state-dependent pricing
adjustment hazard
online markets
JEL
E30
Abstract
Are prices sticky due to the presence of strategic complementarity in price setting? If so, to what extent? To address these questions, we investigate retailers' price setting behavior, and in particular strategic interaction between retailers, using a unique dataset containing by-the-second records of prices offered by retailers on a major Japanese price comparison website. We focus on fluctuations in the lowest price among retailers, rather than the average price, examining how quickly the lowest price is updated in response to changes in marginal costs. First, we find that, when the lowest price falls rapidly, the frequency of changes in the lowest price is high, while the size of downward price adjustments remains largely unchanged. Second, we find a positive autocorrelation in the frequency of changes in the lowest price, and that there tends to be a clustering where once a change in the lowest price occurs, such changes occur in succession. In contrast, there is no such autocorrelation in the size of changes in the lowest price. These findings suggest that retailers imitate each other when deciding to adjust (or not to adjust) their prices, and that the extensive margin plays a much more important role than the intensive margin in such strategic complementarity in price setting.
Description
August 19, 2009
Publisher
Research Center for Price Dynamics, Institute of Economic Research, Hitotsubashi University
Issued Date
2009-08-21
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Working Paper Series ; No. 44
Relation
Related Identifier
URI
  http://www.ier.hit-u.ac.jp/~ifd/
Number of Pages
28
Sponsorship
日本学術振興会・科学研究費補助金（学術創成研究費） = JSPS Grant-in-Aid for Creative Scientific Research
Appears in Collections
Working Paper Series / Understanding Inflation Dynamics of the Japanese Economy
URL
https://hdl.handle.net/10086/17562