Costs of Managerial Attention and Activity as a Source of Sticky Prices: Structural Estimates from an Online Market [report]

Sara Fisher Ellison, Christopher Snyder, Hongkai Zhang
2018 unpublished
We study price dynamics for computer components sold on a price-comparison website. Our fine-grained data-a year of hourly price data for scores of rival retailers-allow us to estimate a dynamic model of competition, backing out structural estimates of managerial frictions. The estimated frictions are substantial, concentrated in the act of monitoring market conditions rather than entering a new price. We use our model to simulate the counterfactual gains from automated price setting and other
more » ... anagerial changes. Coupled with supporting reduced-form statistical evidence, our analysis provides a window into the process of managerial price setting and the microfoundation of pricing inertia, issues of growing interest in industrial organization and macroeconomics. for their insightful advice, to Masao Fukui for outstanding research assistance, and to various seminar participants for helpful comments.
doi:10.3386/w24680 fatcat:q4quluas35b3bow27f7ttxk6vy