Market Power and the Cross-Industry Behavior of Prices Around a Business Cycle Trough

Market Power and the Cross-Industry Behavior of Prices Around a Business Cycle Trough

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Description

Our paper examines the behavior of prices in a large number of highly-disaggregated industries around the trough of the business cycle. We conclude that the degree to which prices are pro- or counter- cyclical differs between business cycle peaks and business cycle troughs, and that the cyclical behavior of prices varies substantially across industries. We also observe a tendency for industry prices to rise immediately following a business cycle trough. In general, we accept a market power explanation for that observation: either oligopolists pricing above marginal cost take advantage of a cyclical tendency for demand functions to grow more inelastic in the early stages of a boom or else interfirm coordination becomes more effective after a trough. From the behavior of prices as a recession ends and a boom begins, our paper also identifies a set of industries likely on average to be exercising market power.show more

Product details

  • Paperback | 54 pages
  • 215.9 x 279.4 x 3.05mm | 190.51g
  • Createspace
  • United States
  • English
  • black & white illustrations
  • 1514157098
  • 9781514157091