Download This PaperRockets and Feathers: Understanding Asymmetric Pricing
26 Pages Posted: 9 Apr 2007 Last revised: 16 Oct 2009
Date Written: May 1, 2008
Abstract
Prices rise like rockets but fall like feathers. This stylized fact of most markets is confirmed by many empirical studies. In this paper, I develop a model with competitive firms and rational partially informed consumers where the asymmetric response to costs by firms emerges naturally. In contrast to public opinion and past work, collusion is not necessary to explain such a result.
Keywords: Asymmetric Pricing, Rockets and Feathers, Consumer Search, Cost Pass-through
JEL Classification: D21, D40, L13
Suggested Citation: Suggested Citation
Tappata, Mariano E., Rockets and Feathers: Understanding Asymmetric Pricing (May 1, 2008). RAND Journal of Economics, Vol. 40, No. 4, 2009, Available at SSRN: https://ssrn.com/abstract=978022
Do you have negative results from your research you’d like to share?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.