Lumpy Price Adjustments: A Microeconometric Analysis

This paper presents a simple model of state-dependent pricing that allows identification of the relative importance of the degree of price rigidity that is inherent to the price setting mechanism (intrinsic) and that which is due to the price’s driving variables (extrinsic). Using two data sets consisting of a large fraction of the price quotes used to compute the Belgian and French CPI, we are able to assess the role of intrinsic and extrinsic price stickiness in explaining the occurrence and magnitude of price changes at the outlet level. We find that infrequent price changes are not necessarily associated with large adjustment costs. Indeed, extrinsic rigidity appears to be significant in many cases. We also find that asymmetry in the price adjustment could be due to trends in marginal costs and/or desired mark-ups rather than asymmetric cost of adjustment bands

ANALISIS PENENTUAN HARGA JUAL GUNA MENINGKATKAN PROFITABILITAS PADA PERUSAHAAN ROKOK PT. JATI MESEM MALANG

This research is a case study in cigarette company PT. Teak mesem Malang with the title "Selling Pricing Analysis To Improve Profitability On Cigarette Company PT. Teak mesem Malang. The purpose of this study is to analyze the determination of the selling price of a cost-plus pricing method with the contribution approach to improve the profitability of tobacco company PT. Teak mesem Malang. Data analysis tool used in determining the selling price on a cost-plus pricing method with the contribution approach is to separate the semi-variable costs into fixed costs and variable costs. Separation of these costs using the least square method, ie: Y = a + bx. Next determine the selling price of a cost-plus pricing method with the contribution approach by summing the variable production costs and other costs with a variable percentage of profit expected by the company multiplied by the basis for setting fees. Then to find out the level of corporate profits can be made with analysis of contribution margin ratio (CMR), which reduced sales results with variable cost, then the result is divided by sales revenue. The result of the calculation method of cost-plus pricing with the contribution approach based on the results, with the selling price of the selling price of the company there is a difference. The selling price for cigarettes analysis is Rp 268 Gold. 107,137.92 per ballnya, while the selling price of the company's USD. 107 000 per ballnya. The selling price of cigarettes results of the analysis for JM Son USD. 93225.53 per ballnya, while the selling price of the company Rp.93.000 per ballnya. Then the contribution margin ratio of each type of product has increased compared to the contribution margin ratio is based on the price level of the company, the magnitude of the increase are as follows: 268 cigarettes and tobacco 0.10% Gold JM Son of 0.19%. From the analysis results in a cost-plus pricing method with the contribution approach to determining the selling price, it is known that in a cost-plus pricing method with the approach of the contribution by the company set a sales price lower than the results of the analysis. So the profitability of acquired firms is also lower compared with the results of the analysis. Based on the above conclusions, the authors suggest should be a cigarette company PT. Teak mesem Malang trying to achieve planned sales levels, in addition to the company in determining the selling price should be using the results of the analysis. To improve the profitability to be achieved by the company, should a company other than using the analysis of contribution margin ratio also keep operating costs do not rise, due to the increase in operating costs resulted in the profitability of the acquired company will also go down

ALTERNATIVE PRICE SPECIFICATION FOR MUNICIPAL WATER DEMANDS: AN EMPIRICAL TEST

Based on data from 92 Minnesota cities, the analyses shows that neither marginal price or average price appear as the better predictor of demand. The price elasticity of demand ranges from -. 17 for marginal price in the linear model to -.27 for average price in the log linear model. It appears from the analysis that many consumers are unaware of the marginal price of their water. Thus utilities should simplify their pricing structures and present consumers with an easy to understand costs of water such as the cost of six hours of lawn watering.Demand and Price Analysis, Public Economics,

Revealed Price Preference: Theory and Empirical Analysis

With the aim of determining the welfare implications of price change in consumption data, we introduce a revealed preference relation over prices. We show that an absence of cycles in this preference relation characterizes a model of demand where consumers trade-off the utility of consumption against the disutility of expenditure. This model is appropriate whenever a consumer's demand over a {\em strict} subset of all available goods is being analyzed. For the random utility extension of the model, we devise nonparametric statistical procedures for testing and welfare comparisons. The latter requires the development of novel tests of linear hypotheses for partially identified parameters. In doing so, we provide new algorithms for the calculation and statistical inference in nonparametric counterfactual analysis for a general partially identified model. Our applications on national household expenditure data provide support for the model and yield informative bounds concerning welfare rankings across different prices.Comment: 53 page

An analysis of the price behaviour of selected vegetables at a New Zealand auction : a thesis presented in partial fulfillment of the requirements for the degree of Master of Business Studies at Massey University

The immediate and short run behaviour of prices and volumes of eighteen vegetables at auction are examined. The objectives were to describe the behaviour of weekly prices and volumes and to investigate various relationships. The data analysed are weekly volume and turnover for eighteen vegetables at a Palmerston North auction for a three year period. Various climatological variables relating to the same period were also analysed. Much of the descriptive analysis relies on the techniques of Exploratory Data Analysis; boxplots, letterplots, and a resistant smoother are used extensively. These methods facilitate the analysis of the behaviour of prices and volumes over time. The auction marketing system is discussed at length, with particular emphasis on the effect of length of run on supply response. Various relationships are examined predominantly using stepwise reqression. These include: current price and quantity; current quantity and lagged price; quantity and month of the year; price and month of the year; price and various weather variables; quantity and various weather variables; current price and lagged price. Some transformations are used to try to get a more linear relationship between price and quantity. This relied on fitting several resistant lines, another EDA technique. The interdependence or interrelationship of prices examined using Principal Components Analysis, and principal components were extracted and described. Some useful insights into the behaviour of the market are gained. Immediate run price variation, that is from week to week, is quite large and this is reflected in low R-squared values for the price-volume relationships. The relationship between current marketed volume and lagged prices was also investigated. The results indicate that in the immediate run, using weekly prices, this relationship is weak. Arguably the most useful analysis was the monthly price boxplots which give a clear graphic display of the behaviour of prices. These and the other plots give indications as to when prices were highest and lowest. They may be useful to growers in planning production and harvesting. It was discovered that weekly prices were more variable than weekly volumes for 10 vegetables, less variable for six vegetables, and equally variable for two vegetables. 0ften the highest weekly price did not coincide with the lowest weekly supply, and the lowest price did not correspond to the highest supply. This suggests that bidders under or over estimate the quantity on the floor and each other's requirements

PRICE RELATIONSHIPS IN THE U.S. FIBER MARKETS: ITS IMPLICATIONS FOR COTTON INDUSTRY

The paper examined the price relationship between cotton and polyester. The results provide strong evidence of long term price transmissions and granger causality between cotton and polyester price as well as the asymmetry transmissions for cotton on cotton, cotton on polyester, and polyester on polyester price. However, we did not find any evidence that there exists asymmetry transmission for polyester price on cotton price. Our results also did not support the contemporaneous effects hypothesis between polyester price and cotton price.Demand and Price Analysis,

Why are Prices Sticky? Evidence from Business Survey Data

This paper offers new insights on the price setting behaviour of German retail firms using a novel dataset that consists of a large panel of monthly business surveys from 1991-2006. The firm-level data allows matching changes in firms' prices to several other firm-characteristics. Moreover, information on price expectations allow analyzing the determinants of price updating. Using univariate and bivariate ordered probit specifications, empirical menu cost models are estimated relating the probability of price adjustment and price updating, respectively, to both time- and state- dependent variables. First, results suggest an important role for state-dependence; changes in the macroeconomic and institutional environment as well as firm-specific factors are significantly related to the timing of price adjustment. These findings imply that price setting models should endogenize the timing of price adjustment in order to generate realistic predictions concerning the transmission of monetary policy. Second, an analysis of price expectations yields similar results providing evidence in favour of state-dependent sticky plan models. Third, intermediate input cost changes are among the most important determinants of price adjustment suggesting that pricing models should explicitly incorporate price setting at different production stages. However, the results show that adjustment to input cost changes takes time indicating "additional stickiness" at the last stage of processing

Do Consumers Pay for Being Healthy Conscious?— An Analysis of Price Discrimination on Healthier Food Product

‘Healthier food product’ has experienced a rapid growth rate in recent years in U.S. because of the increasing consumer demand for healthier and environmental friendlier lifestyle. This analysis is looking for price discrimination evidences by comparing price cost margins of regular food products and healthier food products. Price cost margins are computed by solving firms' profit maximization problem and relevant parameters are estimated from consumers' choice decisions. Specifically, price elasticities and price coefficients are estimated using nonlinear GMM estimation in order to construct price cost margin. The empirical analysis employs product level ketchup data across 50 MSA in U.S. from 2001 to 2006.Price Discrimination, Discrete Choice Models, Random Coefficients, Ketchup Industry., Agricultural and Food Policy, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Industrial Organization, Marketing,