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Pricing Decisions in the Euro AreaHow Firms Set Prices and Why$
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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

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Price Setting in German Manufacturing

Price Setting in German Manufacturing

Evidence from New Survey Data

Chapter:
(p.97) 6 Price Setting in German Manufacturing
Source:
Pricing Decisions in the Euro Area
Author(s):

Harald Stahl

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195309287.003.0007

This chapter presents new evidence on the formation of producer prices based on a one-time survey that was conducted on a sample of 1,200 German firms in manufacturing in June 2004. Most of the firms have price-setting power and apply mark-up pricing. Fixed nominal contracts are the most important reason for postponing price adjustment. The second most likely reason is coordination failure, which causes more upward than downward stickiness. A cluster analysis shows that firms can be assigned to four different groups according to an increasing complexity of reasons of price stickiness.

Keywords:   producer prices, survey, mark-up pricing, price adjustment, nominal contracts, coordination failure, downward stickiness, cluster analysis

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