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Macroeconomics and DevelopmentRoberto Frenkel and the Economics of Latin America$
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Mario Damill, Martín Rapetti, and Guillermo Rozenwurcel

Print publication date: 2016

Print ISBN-13: 9780231175081

Published to Columbia Scholarship Online: September 2016

DOI: 10.7312/columbia/9780231175081.001.0001

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Markups Under Uncertainty

Markups Under Uncertainty

Variations on Price Decisions in High Inflation

Chapter:
(p.23) Chapter 2 Markups Under Uncertainty
Source:
Macroeconomics and Development
Author(s):

Daniel Heymann

Francisco Roldán

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231175081.003.0002

this chapter develops a set of models on pricing decisions under uncertainty, extending Frenkel’s classic 1979 paper in a number of ways. The authors explore the role of inventory management and liquidity constraints as mechanisms through which uncertainty about future unit costs may make profit-maximizing firms reluctant to sell goods in the current period, and thus create incentives to raise markups

Keywords:   pricing decisions, uncertainty, liquidity constraints, inventory management, mark-up pricing

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