Markups Under Uncertainty: Variations on Price Decisions in High Inflation

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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Mario Damill, Martín Rapetti, and Guillermo Rozenwurcel

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Markups Under Uncertainty

Markups Under Uncertainty

Variations on Price Decisions in High Inflation

Daniel Heymann

Francisco Roldán