We construct a model of a firm competing for market share in a customer market and making investments in physical capital. The firm is financially constrained and there are implementation lags in investment. Our model predicts that product prices should depend on costs and competitors' prices,...

A parsimonious structural model of price and quantity dynamics is applied to Swedish exports and export prices for manufactured goods 1972-1996. Two sources of dynamics are considered: customer markets and pre-set prices. The dynamic adjustment of exports is very much in line with what the...

A structural dynamic model of price and quantity adjustment is estimated on time-series data for exports and export prices. Two sources of dynamics are considered: customer markets and pre-set prices. As predicted by the customer market model, the market share adjusts slowly after a change in...

We construct a model of a financially constrained firm making pricing and investment decisions. The firm operates in a market where customers respond slowly to price changes and there are implementation lags in investment (time to build). Our model implies that the markup over marginal cost is...