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Price-Setting Behaviour in Lesotho: Stylised Facts from Consumer Retail Prices

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  • Mamello Amelia Nchake
  • Lawrence Edwards
  • Neil Rankin
Abstract
This paper documents some of the main features of price-setting behaviour by retail outlets in Lesotho over the period March 2002 to December 2009. These features include the frequency, size, duration and synchronisation of price changes. In addition, the paper compares price-setting behaviour in Lesotho and South Africa using a comparable set of products. The findings reveal considerable heterogeneity in price-setting behaviour across products, outlets, locations and time. Variations in inflation are strongly correlated with the average size of price changes, but rising inflation raises the frequency of price increases and reduces the frequency of price decreases. Price decreases constitute an important determinant of inflation movements. Surprisingly, the frequency and size of price changes in Lesotho differ substantially from those in South Africa, despite the presence of common retail chains and their joint membership in a customs union and common monetary area. These findings open up opportunities for further research into the sources of heterogeneity across products and Lesotho and South Africa in the setting of prices.

Suggested Citation

  • Mamello Amelia Nchake & Lawrence Edwards & Neil Rankin, 2015. "Price-Setting Behaviour in Lesotho: Stylised Facts from Consumer Retail Prices," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 199-219, June.
    • Handle: RePEc:bla:sajeco:v:83:y:2015:i:2:p:199-219
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    File URL: http://hdl.handle.net/10.1111/saje.12054
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    Cited by:

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    3. Yılmaz, Engin & Süslü, Bora, 2018. "The Determinants of Price Frequency in Turkey," MPRA Paper 86350, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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