Guimaraes, Bernardo; Sheedy, Kevin D. - In: American Economic Review 101 (2011) 2, pp. 844-76
A striking fact about pricing is the prevalence of "sales": large temporary price cuts followed by prices returning to exactly their former levels. This paper builds a macroeconomic model with a rationale for sales based on firms facing customers with different price sensitivities. Even if firms...