Causes of retail price fixity: An empirical analysis

Timothy Richards, Paul M. Patterson

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

There are many plausible theoretical explanations for retail price fixity, but few empirical tests. This study develops a general theoretical model that nests several explanations within a real options framework. One unique implication of this model is that retail prices will exhibit greater fixity the more volatile are wholesale prices. Our empirical example supports the real options hypothesis as well as price rivalry, flat marginal cost curves, and consumer search or goodwill costs.

Original languageEnglish (US)
Pages (from-to)117-136
Number of pages20
JournalJournal of Economics and Business
Volume56
Issue number2
DOIs
StatePublished - Mar 2004

Fingerprint

Empirical analysis
Retail prices
Real options
Marginal cost
Empirical test
Consumer search
Goodwill
Costs
Rivalry
Wholesale prices

Keywords

  • Friction model
  • Price fixity
  • Strategic pricing

ASJC Scopus subject areas

  • Business, Management and Accounting(all)

Cite this

Causes of retail price fixity : An empirical analysis. / Richards, Timothy; Patterson, Paul M.

In: Journal of Economics and Business, Vol. 56, No. 2, 03.2004, p. 117-136.

Research output: Contribution to journalArticle

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