Abstract
This paper derives the optimal pricing policy for a firm facing menu costs and stochastic production cost. The pricing policy is a boundary pricing policy and numerical comparative static analysis shows how exogenous parameters - the drift and variance of the production cost, the discount factor and the menu costs - affect the boundaries. Analyzing daily data for the Danish petrol price illustrates that a boundary pricing policy indeed has been followed for the period 1988-1992, with occasional shifts in both the desired mark-up and more importantly in the width of the bounds. While the theoretical model can say nothing of the shifts in desired mark-up, changes in the width of the bounds are found to be consistent with the implications of the model. (au)
Citation Formats
Stampe Christensen, M.
Price setting under cost uncertainty and menu costs - the case of the Danish petrol market.
Denmark: N. p.,
1994.
Web.
Stampe Christensen, M.
Price setting under cost uncertainty and menu costs - the case of the Danish petrol market.
Denmark.
Stampe Christensen, M.
1994.
"Price setting under cost uncertainty and menu costs - the case of the Danish petrol market."
Denmark.
@misc{etde_10127925,
title = {Price setting under cost uncertainty and menu costs - the case of the Danish petrol market}
author = {Stampe Christensen, M}
abstractNote = {This paper derives the optimal pricing policy for a firm facing menu costs and stochastic production cost. The pricing policy is a boundary pricing policy and numerical comparative static analysis shows how exogenous parameters - the drift and variance of the production cost, the discount factor and the menu costs - affect the boundaries. Analyzing daily data for the Danish petrol price illustrates that a boundary pricing policy indeed has been followed for the period 1988-1992, with occasional shifts in both the desired mark-up and more importantly in the width of the bounds. While the theoretical model can say nothing of the shifts in desired mark-up, changes in the width of the bounds are found to be consistent with the implications of the model. (au)}
place = {Denmark}
year = {1994}
month = {Dec}
}
title = {Price setting under cost uncertainty and menu costs - the case of the Danish petrol market}
author = {Stampe Christensen, M}
abstractNote = {This paper derives the optimal pricing policy for a firm facing menu costs and stochastic production cost. The pricing policy is a boundary pricing policy and numerical comparative static analysis shows how exogenous parameters - the drift and variance of the production cost, the discount factor and the menu costs - affect the boundaries. Analyzing daily data for the Danish petrol price illustrates that a boundary pricing policy indeed has been followed for the period 1988-1992, with occasional shifts in both the desired mark-up and more importantly in the width of the bounds. While the theoretical model can say nothing of the shifts in desired mark-up, changes in the width of the bounds are found to be consistent with the implications of the model. (au)}
place = {Denmark}
year = {1994}
month = {Dec}
}