Optimum Pricing Policy Under Stochastic Inflation.

Abstract

In this paper we consider pricing policies of individual firms in an inflationary environment. Each firm expects the general price level increase and must determine the rate of increase of its own price. It is assumed that the firm incurs an adjustment cost when it changes its nominal price. Consequently, firms choose to change prices occasionally rather than continuously. Our purpose is to analyze the dependence of the magnitude and the frequency of nominal price changes on the inflationary process. This problem has been analyzed by Sheshinski and Weiss 1977 and 1979 for the case of a fixed and certain rate of increase in the aggregate price level. This paper extends the analysis to the case of uncertainty.

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Document Details

Document Type
Technical Report
Publication Date
Jan 01, 1982
Accession Number
ADA123594

Entities

People

  • Eytan Sheshinski
  • Yoram Weiss

Organizations

  • Stanford University

Tags

DTIC Thesaurus Topics

  • Amplitude
  • Behavioral Sciences
  • Economics
  • Equations
  • Frequency
  • Inventory
  • Military Research
  • New York
  • Probability
  • Psychology
  • Public Policy
  • Random Variables
  • Social Sciences
  • Stochastic Processes
  • Uncertainty
  • United States
  • Universities

Fields of Study

  • Economics

Readers

  • Adaptive Control and Estimation with Uncertainty in Dynamic Systems.
  • Educational Psychology
  • Industrial Economics