Sticky prices

Updated: Aug 20, 2021

Prices which do not vary in the face of small changes in costs or demand conditions. Sticky prices can be rationalized by administrative costs in changing prices, and through uncertainty about which way costs or demand conditions will move next. Firms may also believe that raising prices risks losing customers if competitors do not follow suit, while cutting prices runs the risk of starting a price war.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.