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Price-setting Behavior and Competition in Developing Countries: An Analysis of Retail Outlets in Lesotho
- From:
- Department for International Development
- Published:
- 1 December 2015
- Country:
- Lesotho
- Document Type:
- Working Paper
- Theme:
- Economic Growth
- Authors:
- Nchake, M, Edwards, L, and Sundaram, A
Studies the relationship between price setting behaviour and competition where markets and information flows are relatively imperfect
Abstract
Using a unique dataset that combines survey data on retail outlets in Lesotho, and detailed historical information on their product prices, we find a non-monotonic relationship between the frequency of price changes and perceived competition, measured by the number of reported competitors.
This non-monotonic relationship is consistent with a model of increasing costs of coordinating price changes under tacit collusion with few competitors, and a breakdown of collusion at higher levels of competition.
This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme
Citation
Nchake, M., Edwards, L., Sundaram, A. Price-setting Behavior and Competition in Developing Countries: An Analysis of Retail Outlets in Lesotho. (2015) 27 pp
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Document information
Published: 1 December 2015
From: Department for International Development
Country: Lesotho
Document Type: Working Paper
Theme: Economic Growth
Authors: Nchake, M Edwards, L Sundaram, A