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Heterogeneity in price setting behavior, spatial disparities and sectoral diversity: Evidence from a panel of Italian firms

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  • Migliardo, Carlo

Abstract

In this paper, we analyze firms' pricing behavior using a full informative micro dataset that accounts for a large part of Italian firms. In our view, “the black boxes” to examine are the relations between price setting, market structure and spatial disparities. The paper aims to extend the empirical literature in several directions. A first goal of the research is to investigate the link between heterogeneity in price changes and spatial dependence. Besides, we compare the price dynamics among sectors, namely manufacturing vs. service. It is irrefutable that prices stickiness is linked to good market rigidities. Consequently, these issues have extremely important policy implications; for instance, the Monetary Authority considers the macro price indexes in order to determine the right policy to stabilize the economy and to improve social welfare. However, the Central Bank does not distinguish the likely aggregation bias source from the cross sector–region–country heterogeneities.

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  • Migliardo, Carlo, 2012. "Heterogeneity in price setting behavior, spatial disparities and sectoral diversity: Evidence from a panel of Italian firms," Economic Modelling, Elsevier, vol. 29(4), pages 1106-1118.
    • Handle: RePEc:eee:ecmode:v:29:y:2012:i:4:p:1106-1118
    DOI: 10.1016/j.econmod.2012.03.014
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    Cited by:

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    2. Crespi, Francesco & Liberati, Paolo & Paradiso, Massimo & Scialà, Antonio & Tedeschi, Simone, 2021. "Smokers are different: The impact of price increases on smoking reduction and downtrading," Economic Modelling, Elsevier, vol. 97(C), pages 326-334.

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    More about this item

    Keywords

    Price rigidity; Heterogeneous agents; Aggregation bias; Micro price data;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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