Jump to ContentJump to Main Navigation
Pricing Decisions in the Euro AreaHow Firms Set Prices and Why$
Users without a subscription are not able to see the full content.

Silvia Fabiani, Claire Suzanne Loupias, Fernando Manuel Monteiro Martins, and Roberto Sabbatini

Print publication date: 2007

Print ISBN-13: 9780195309287

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780195309287.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 19 September 2019

Summary of Results for the Euro Area

Summary of Results for the Euro Area

Chapter:
(p.32) 2 Summary of Results for the Euro Area
Source:
Pricing Decisions in the Euro Area
Author(s):

Silvia Fabiani

Claire Loupias

Martine Druant

Ignacio Hernando

Claudia Kwapil

Bettina Landau

Fernando Martins

Thomas Mathä

Sabbatini Roberto

Harald Stahl

Ad Stokman

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195309287.003.0003

This chapter summarizes the results of firms' pricing practices collected through surveys conducted by the national central banks of nine countries. The results suggest that the model of perfect competition with the law of one price is not the blueprint for euro area markets: markup pricing is the dominant practice adopted by firms in setting prices and price discrimination, across customers and markets, and it is very common. Around one-third of the companies follow mainly time-dependent rules while the remaining two-thirds use pricing rules with some element of state dependence. Firms review prices with a frequency between one and three times per year and take into account a wide range of information including expectations, although about one-third of them follows a purely backward-looking behavior. Price movements in response to shocks are asymmetrical: price increases are mostly affected by cost shocks, and price reductions mostly affected by changes in market conditions (demand and competitors' prices).

Keywords:   Euro area firms, price setting, price stickiness, asymmetries in price adjustment, survey data

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .