Inflation, price dispersion, and market structure

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Caglayan, Mustafa and Filiztekin, Alpay and Rauh, Michael T. (2008) Inflation, price dispersion, and market structure. European Economic Review, 52 (7). pp. 1187-1208. ISSN 0014-2921

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Official URL: http://dx.doi.org/10.1016/j.euroecorev.2008.01.003


In this paper, we use a unique micro-level data set to test some basic predictions of equilibrium search models and the theoretical literature on inflation and dispersion. A novel aspect of our data is that it contains price observations from the bazaar in Istanbul, where competition is relatively strong and search and menu costs low compared with the other store types in our data set. Consistent with the theory, we find that dispersion is lowest and prices change more frequently in the bazaar. We also find comprehensive support for several predictions of the theoretical literature on inflation and dispersion.

Item Type:Article
Uncontrolled Keywords:Inflation; Market structure; Menu cost models; Micro panel data; Price dispersion; Search; Sticky prices
Subjects:H Social Sciences > HB Economic Theory > HB135-147 Mathematical economics. Quantitative methods
ID Code:9692
Deposited By:Alpay Filiztekin
Deposited On:27 Oct 2008 15:21
Last Modified:19 Jul 2019 14:13

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