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Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry

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Listed:
  • Maman Setiawan
  • Grigorios Emvalomatis
  • Alfons Oude Lansink

Abstract

type="main"> This paper investigates the relationship between industrial concentration and price rigidity in the Indonesian food and beverages industry. A Cournot model of firm behavior is used in which prices adjust according to a partial adjustment mechanism. The model is applied to panel data of the Indonesian food and beverages industry over the period 1995–2006. The results suggest that industrial concentration has a positive effect on percentage price changes. Furthermore, the speed of price adjustment is higher when the per unit cost of production rises.

Suggested Citation

  • Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2015. "Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry," Asian Economic Journal, East Asian Economic Association, vol. 29(1), pages 61-72, March.
    • Handle: RePEc:bla:asiaec:v:29:y:2015:i:1:p:61-72
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    References listed on IDEAS

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    1. Paul M. Sweezy, 1939. "Demand Under Conditions of Oligopoly," Journal of Political Economy, University of Chicago Press, vol. 47(4), pages 568-568.
    2. Elizabeth Caucutt & Mrinal Ghosh & Christina Kelton, 1999. "Durability Versus Concentration as an Explanation for Price Inflexibility," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 27-50, February.
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    8. Carlton, Dennis W, 1986. "The Rigidity of Prices," American Economic Review, American Economic Association, vol. 76(4), pages 637-658, September.
    9. Weiss, Christoph R., 1995. "Determinants of price flexibility in oligopolistic markets: Evidence from austrian manufacturing," Journal of Economics and Business, Elsevier, vol. 47(5), pages 423-439, December.
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    13. Louis Phlips, 1980. "Intertemporal Price Discrimination and Sticky Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(3), pages 525-542.
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    Cited by:

    1. G. R. Chen, 2016. "Dynamic Model for Market Competition and Price Rigidity," Applied Economics, Taylor & Francis Journals, vol. 48(36), pages 3485-3496, August.
    2. Maman Setiawan & Grigorios Emvalomatis & Alfons Oude Lansink, 2013. "Structure, conduct, and performance: evidence from the Indonesian food and beverages industry," Empirical Economics, Springer, vol. 45(3), pages 1149-1165, December.
    3. Romero, Jaime & Cruz-Roche, Ignacio & Charron, Jean-Philippe, 2020. "The myth of price convergence under economic integration: A proposed explanation for the difference in food prices across European countries," European Management Journal, Elsevier, vol. 38(2), pages 267-276.

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