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Market Structure, Inflation, and Price Dispersion

By Mustafa Caglayan, Alpay Filiztekin and Michael T. Rauh

Abstract

In this paper, we investigate the impact of market structure on the\ud relationship between inflation and price dispersion. We first propose a new empirical\ud model of the relationship between inflation and dispersion with firmer theoretical\ud foundations, and then extend the basic model to incorporate the potential effects\ud of market structure. We estimate the basic and market structure specifications\ud using a unique micro-level data set from Istanbul, which consists of monthly price\ud observations from three different store types: convenience stores, open-air markets,\ud and supermarkets. Our empirical findings support almost all of the basic and market\ud structure predictions

Topics: inflation, market structure, menu cost models, micro panel data, price dispersion
Publisher: Dept. of Economics, University of Leicester
Year: 2004
OAI identifier: oai:lra.le.ac.uk:2381/4578

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