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Pricing Decisions in the Euro AreaHow Firms Set Prices and Why$
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Silvia Fabiani, Claire Suzanne Loupias, Fernando Manuel Monteiro Martins, and Roberto Sabbatini

Print publication date: 2007

Print ISBN-13: 9780195309287

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780195309287.001.0001

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A Survey of Price Setting Practices of Luxembourg Firms

A Survey of Price Setting Practices of Luxembourg Firms

(p.124) 8 A Survey of Price Setting Practices of Luxembourg Firms
Pricing Decisions in the Euro Area

Patrick Lünnemann

Thomas Mathä

Oxford University Press

This chapter analyses the pricing behavior of Luxembourg firms. It provides evidence on the use of time- and state-dependent, as well as on forward-looking, backward-looking, and rules of thumb behavior. Firms' adjustment speed differs according to the type and source of shock. Similarly, the factors judged most relevant for price increases and decreases differ. The most relevant theories explaining price rigidity are implicit contracts, cost-based pricing and explicit contracts.

Keywords:   Luxembourg firms, pricing behavior, adjustment to shocks, price increases, price decreases

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