TY  - JOUR
AU  - Davis,Michael C.
AU  - Hamilton,James D.
TI  - Why Are Prices Sticky? The Dynamics of Wholesale Gasoline Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9741
PY  - 2003
Y2  - June 2003
UR  - http://www.nber.org/papers/w9741
L1  - http://www.nber.org/papers/w9741.pdf
N1  - Author contact info:
Michael Davis
E-Mail: michaeljyd@usfamily.net

James D. Hamilton
Department of Economics, 0508
University of California, San Diego
9500 Gilman Drive
La Jolla, CA 92093-0508
Tel: 858/534-5986
Fax: 858/534-7040
E-Mail: jhamilton@ucsd.edu
AB  - The menu-cost interpretation of sticky prices implies that the probability of a price change should depend on the past history of prices and fundamentals only through the gap between the current price and the frictionless price. We find that this prediction is broadly consistent with the behavior of 9 Philadelphia gasoline wholesalers. We nevertheless reject the menu-cost model as a literal description of these firms' behavior, arguing instead that price stickiness arises from strategic considerations of how customers and competitors will react to price changes.
ER  -