Price competition in an inflationary environment
In an experimental study with price-setting firms we find that inflation significantly reduces real prices (by lowering price markups) and significantly raises welfare compared to the treatment with a constant overall price level. Money illusion and a reduced ability to collude in an environment wit...
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| Main Authors: | , |
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| Format: | Article (Journal) |
| Language: | English |
| Published: |
2019
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| In: |
Journal of monetary economics
Year: 2018, Volume: 104, Pages: 48-66 |
| DOI: | 10.1016/j.jmoneco.2018.09.004 |
| Online Access: | Verlag, Volltext: https://doi.org/10.1016/j.jmoneco.2018.09.004 Verlag, Volltext: http://www.sciencedirect.com/science/article/pii/S0304393218305543 
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| Author Notes: | Peter Duersch, Thomas A. Eife |
| Summary: | In an experimental study with price-setting firms we find that inflation significantly reduces real prices (by lowering price markups) and significantly raises welfare compared to the treatment with a constant overall price level. Money illusion and a reduced ability to collude in an environment with a constantly changing, i.e., increasing, price level drive this result. In a third treatment with deflation, collusion is somewhat reduced as well, but money illusion pushes prices up so that welfare is lower than under inflation. |
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| Item Description: | Available online 20 November 2018 Gesehen am 09.08.2019 |
| Physical Description: | Online Resource |
| DOI: | 10.1016/j.jmoneco.2018.09.004 |