The Welfare Effects of Supply and Demand Frictions in a Dynamic Pricing Game

• 成果类型: Article
• 署名作者: Mysliwski, Mateusz; Sanches, Fabio Miessi; Silva Junior, Daniel; Srisuma, Sorawoot
• 署名单位: Norwegian School of Economics (NHH); Getulio Vargas Foundation; City St Georges, University of London; National University of Singapore
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueaf008
• 发表日期: 2025
• 页码: 1782-1813
• 关键词: switching costs; menu costs; BEHAVIOR; prices; estimators; promotions; category; retailer; MARKETS; models

摘要

We propose a dynamic oligopoly pricing model, in which consumers' choices exhibit inertia and firms face costly price adjustments. The primitives of the model are estimated using scanner data from the UK butter and margarine industry. We evaluate the effects of frictions on price dynamics, profits and consumer welfare. We find that price adjustment costs are substantial and represent between 24%-34% of net margins. Our model predicts that the absence of these costs reduces persistence in prices, increases firms' profits, but has little effect on consumer surplus. The effects of consumer inertia on prices are much more pronounced than when firms cannot adjust prices freely.