Özet:

How the firms respond to different shocks and characteristics of the firms? How the price are set? When are prices changed i.e. time-dependent or state-dependent pricing policy. In this regard data is collected through structured questionnaire from 342 firms in the industrial estates of Khyber Pakhtunkhwa through stratified random sampling technique. It is found that majority of the firms set the price of their main product. 70.8% firms involve in price discrimination, in which most of the firms adopt first degree price discrimination. Most of the firms use current information or a combination of all information for price-setting of their product, which means that the firms practice is not aligned with traditional Philips curve rather it is consistent with hybrid Philips curve. Majority of the firms use a combination of both time and state-dependent pricing policies. A relatively high proportion of firms change prices at the change of new calendar year or at the start of fiscal year. Firms’ dual behavior of backward-looking and forward-looking indicate that disinflationary policies be carefully designed as sacrifice ratio, albeit moderate, is not zero.

Anahtar Kelimeler: