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| Author: | Dossche, M. Heylen, F. Poel, D. Van den |
| Title: | The kinked demand curve and price rigidity: evidence from scanner data |
| Journal: | Scandinavian Journal of Economics
2010 : VOL. 112:4 p. 723-752 |
| Index terms: | pricing microeconomics products elasticity of demand Europe |
| Language: | eng |
| Abstract: | In this paper the curvature of the demand curve for a wide range of products is estimated. The paper uses an extension of Deaton and MuellbauerÂ’s Almost Ideal Demand System and scanner data from a large euro area retailer. It finds evidence that the overall price elasticity of demand is higher for price increases than for price decreases. However, the overall degree of curvature is one to two orders of magnitude smaller than the value economists usually impose. This indicates that the shape of the demand curve is unlikely to be the only source of real price rigidity. |
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