Competition, Cost Shocks and Price setting

Price setting is an important way in which firms compete and affect the demand for their goods. Although it is a core topic in economics, many theories of price setting have not been evaluated using data. This project aims to understand how firms decide on the prices of goods they produce and provide evidence for various theories using micro-data on Swedish firms. In particular, the project focuses on measuring how changes in costs, competitive pressures and uncertainty in input prices affect firms’ price setting behavior.