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| Author: | Bhaskar, V. Machin, S. Reid, G. |
| Title: | Testing a model of the kindred demand curve. |
| Journal: | Journal of Industrial Economics
1991 : MAR, VOL. 39:3, p. 241-254 |
| Index terms: | DEMAND FUNCTIONS COMPETITION PRICES ECONOMETRIC MODELS |
| Language: | eng |
| Abstract: | Survey data on the responses firms expect from their competitors when they change prices are analyzed. There is evidence of an asymmetry in expected responses, which provides some support for modified versions of the kinked demand curve. The asymmetry in responses is found to be cyclically sensitive, and to differ with certain firm characteristics. Theories of oligopoly which give rise to asymmetries in price responses are discussed. The modelling strategy is described. The firm characteristics on which the empirical work was based are summarized. The data come from a survey of 73 small firms gathered in 1985. Ordered Probit estimates on the firm's conjectures are provided. |
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