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competitive sectors—separately parameterized to match the same microdata on price flexibility—the oligopoly economy features a … parameters, output responses are five times larger. An oligopoly economy also (i) requires smaller menu costs and idiosyncratic … rationale for positive menu costs: in an oligopoly firms prefer a degree of rigidity to complete flexibility. Quantitatively …
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We study how the interaction of market power and nominal price rigidity influences inflation dynamics. We formulate a tractable model of oligopolistic competition and sticky prices and derive closed-form expressions for the pass-through of idiosyncratic and common cost shocks to firms' prices....
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We study the propagation of monetary shocks in a sticky-price general-equilibrium economy where the firms' pricing strategy feature a complementarity with the decisions of other firms. In a dynamic equilibrium the firm's price-setting decisions depend on aggregates, which in turn depend on...
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