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- Title
TRANSACTION-COST INFLUENCES ON THE ADJUSTMENT OF INDUSTRIES' PRICES AND OUTPUTS.
- Authors
Bradburd, Ralph M.; Caves, Richard E.
- Abstract
Abstract--Short-run adjustments of prices and outputs in producer-goods industries should reflect suppliers' continuing quasi-contractual relationships with their industrial customers. We test hypotheses about these relationships by analyzing cross-section determinants of time-series coefficients showing the rates of adjustment of industries' prices and outputs to movements of demand (inferred from customers' outputs). We confirm that price adjustments decrease with the bases for "sticky" relations with customers; the sensitivity of quantity adjustments increases with those bases and decreases with suppliers' own adjustment costs. We also confirm the standard hypothesis that price flexibility decreases with producer concentration.
- Subjects
PRICES; TRANSACTION costs; EXTERNALITIES; PRODUCTION (Economic theory); QUASI contracts; INDUSTRIES; ECONOMIC demand; HYPOTHESIS; PRICE flexibility
- Publication
Review of Economics & Statistics, 1987, Vol 69, Issue 4, p575
- ISSN
0034-6535
- Publication type
Article
- DOI
10.2307/1935951