Price Aggregation When Price-Taking Firms' Prices Vary.
In many cases, heterogeneous prices occur in price-taking environments. In empirical work, an aggregate price index is often created from such prices and used to explain aggregate supply and derived demands. The authors show that consistent aggregation places strong restrictions on functional forms that may be used to describe behavior. Unlike the case of aggregation of consumer income, but similar to the case of aggregation of wages, these functional forms are consistent with standard microtheory. Copyright 1989 by The Review of Economic Studies Limited.
Year of publication: |
1989
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Authors: | Pope, Rulon D ; Chambers, Robert G |
Published in: |
Review of Economic Studies. - Wiley Blackwell, ISSN 0034-6527. - Vol. 56.1989, 2, p. 297-309
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Publisher: |
Wiley Blackwell |
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