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Price Rigidity and Industrial Concentration: Evidence from the Indonesian Food and Beverages Industry |
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| Authors: | Maman Setiawan Grigorios Emvalomatis Alfons Oude Lansink |
| Affiliation: | 1. Faculty of Economics and Business, University of Padjadjaran, Bandung, Jawa Barat‐Indonesia;2. Economic Studies, University of Dundee, Dundee, UK;3. Business Economic Group, Wageningen University, Wageningen, the Netherlands |
| Abstract: | This paper investigates the relationship between industrial concentration and price rigidity in the Indonesian food and beverages industry. A Cournot model of firm behavior is used in which prices adjust according to a partial adjustment mechanism. The model is applied to panel data of the Indonesian food and beverages industry over the period 1995–2006. The results suggest that industrial concentration has a positive effect on percentage price changes. Furthermore, the speed of price adjustment is higher when the per unit cost of production rises. |
| Keywords: | food and beverages industry industrial concentration oligopoly structure price rigidity speed of price adjustment L11 L16 L13 L22 |
