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Essay Details:
Essay text:
In addition to physical costs (menu costs), we
identify and measure three types of managerial costs (information gathering,
decision-making, and communication costs) and two types of
customer costs (communication and negotiation costs). We find that the
managerial costs are more than 6 times, and customer costs are more than
20 times, the menu costs. In total, the price adjustment costs comprise
1.22% of the company’s revenue and 20.03% of the company’s net
margin. We show that many components of the managerial and customer
costs are convex, whereas the menu costs are not. We also document the
link between price adjustment costs and price rigidity...
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Common topics in this essay:
- MANAGERIAL AND CUSTOMER COSTS OF PRICE ADJUSTMENT:
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