-level productivity and scale effects. I show here that the incorporation of theory-based endogenous markups into AGE models is not …-group Bertrand (SGB). Growth in the economy is the experiment used to compare these specifications. While the overall effects of …

We present a new partial equilibrium theory of price adjustment, based on consumer loss aversion. In line with prospect … theory, the consumers' perceived utility losses from price increases are weighted more heavily than the perceived utility … an otherwise standard dynamic neoclassical model of monopolistic competition. The resulting theory of price adjustment is …