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Macroeconomic policy and the pricing behavior of imperfectly competitive firms
Author(s) -
Hula David G.
Publication year - 1989
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090100206
Subject(s) - economics , macro , oligopoly , microeconomics , affect (linguistics) , monetary economics , cournot competition , linguistics , philosophy , computer science , programming language
This paper develops theoretical models of the effect of expansionary macroeconomic policy on the pricing behavior of pure monopolist and oligopolist firms. A number of factors are identified which affect the magnitude of the price change chosen by an imperfectly competitive firm in response to macro policy action. The behavior of oligopolistic firms in response to macro policy changes is found to be influenced by the fact that expansionary macro policy initially impacts on industry demand rather than firm demand, and that the oligopolist's consequent pricing behavior will affect the share of the industry demand increase which it is able to appropriate.