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Identifier to cite or link to this item: https://hdl.handle.net/10086/18436

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Title
Competing Firms and Price Adjustment: 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
ワタナベ, ツトム ワタナベ, ツトム
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 rigidities
time-dependent pricing
state-dependent pricing
adjustment hazard function
real rigidities
strategic complementarities in price setting
online markets
JEL
E30
Abstract
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 competing retailers on a major Japanese price comparison website. First, we find that, when the average price of a product across retailers falls rapidly, the frequency of price adjustments is high, while the size of adjustments remains largely unchanged. Second, we find a positive autocorrelation in the frequency of price adjustments, implying that there tends to be a clustering where once a price adjustment occurs, such adjustments occur in succession. In contrast, there is no such autocorrelation in the size of price adjustments. These two findings indicate that the behavior of competing retailers is characterized by state-dependent pricing, rather than time-dependent pricing, especially when prices fall rapidly, and that strategic complementarities play an important role when retailers decide to adjust (or not to adjust) their prices.
Publisher
Research Center for Price Dynamics, Institute of Economic Research, Hitotsubashi University
Issued Date
2010-04
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
Working Paper Series ; No. 54
Relation
Related Identifier
URI
  http://www.ier.hit-u.ac.jp/~ifd/
Number of Pages
31
Appears in Collections
Working Paper Series / Understanding Inflation Dynamics of the Japanese Economy
URL
https://hdl.handle.net/10086/18436