We investigate a firm’s dynamic pricing policy in a storable good market where the cost of production varies over time. In anticipation of a cost increase, the firm selects its prices to affect consumer storage. Price dynamics hinge upon the curvature of demand and the magnitude of the consumer storage cost. When demand is not too convex, the consumers’ reluctance to store leads the firm to reduce prices to stimulate consumer storage. This shapes the firm’s cost pass-through and the price commitment effects. Our analysis provides a novel explanation for the well-documented puzzling patterns of incomplete and negative cost pass-through.

(2022). Storable good market with intertemporal cost variations [journal article - articolo]. In INTERNATIONAL ECONOMIC REVIEW. Retrieved from http://hdl.handle.net/10446/227290

Storable good market with intertemporal cost variations

Fiocco, Raffaele
2022

Abstract

We investigate a firm’s dynamic pricing policy in a storable good market where the cost of production varies over time. In anticipation of a cost increase, the firm selects its prices to affect consumer storage. Price dynamics hinge upon the curvature of demand and the magnitude of the consumer storage cost. When demand is not too convex, the consumers’ reluctance to store leads the firm to reduce prices to stimulate consumer storage. This shapes the firm’s cost pass-through and the price commitment effects. Our analysis provides a novel explanation for the well-documented puzzling patterns of incomplete and negative cost pass-through.
articolo
Antoniou, Fabio; Fiocco, Raffaele
(2022). Storable good market with intertemporal cost variations [journal article - articolo]. In INTERNATIONAL ECONOMIC REVIEW. Retrieved from http://hdl.handle.net/10446/227290
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/227290
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