Market share and price rigidity

• 成果类型: Article
• 署名作者: Kleshchelski, Isaac; Vincent, Nicolas
• 署名单位: Universite de Montreal; HEC Montreal; Washington University (WUSTL)
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2009.02.006
• 发表日期: 2009
• 页码: 344-352
• 关键词: Price rigidity; market share; Customer relations; real rigidities

摘要

Survey evidence shows that the main reason why firms keep prices stable is that they are concerned about losing customers or market share. We construct a general equilibrium model in which firms care about the size of their customer base. Firms and customers form long-term relationships because consumers incur costs to switch sellers. In an environment with sectoral productivity shocks, we show that cost pass-through is a non-monotonic function of the size of switching costs. Specifically, prices tend to become more stable as the fraction of repeat customers increases and the elasticity of the customer base falls. (C) 2009 Elsevier B.V. All rights reserved.