Cyclical pricing, also known as price fluctuation or price variation, refers to the fluctuation of prices in an economy over a certain period of time. These fluctuations can be caused by a variety of factors, including changes in demand, changes in the supply of goods and services, and changes in the overall economic environment.
One of the most common forms of cyclical pricing is the business cycle, which refers to the regular fluctuations in economic activity that an economy experiences over time. These fluctuations can be caused by a variety of factors, including changes in consumer confidence, changes in the availability of credit, and changes in the overall level of economic activity.
During times of economic expansion, demand for goods and services tends to increase, which can lead to an increase in prices. Conversely, during times of economic contraction, demand for goods and services tends to decrease, which can lead to a decrease in prices.
Another factor that can affect cyclical pricing is the level of competition in a particular market. When there is a high level of competition, companies may be more likely to reduce their prices in order to remain competitive. On the other hand, when there is a low level of competition, companies may be more likely to increase their prices in order to maximize profits.
There are a number of tools that economists use to analyze and predict cyclical pricing patterns. One of these tools is the business cycle dating committee, which is responsible for identifying the beginning and ending dates of economic expansions and contractions. Another tool is the National Bureau of Economic Research (NBER), which publishes research on a wide range of economic topics, including cyclical pricing.
In conclusion, cyclical pricing is an important concept in economics that refers to the fluctuation of prices over a certain period of time. These fluctuations can be caused by a variety of factors, including changes in demand, changes in the supply of goods and services, and changes in the overall economic environment. By understanding these fluctuations and using tools like the business cycle dating committee and the NBER, economists can better understand and predict cyclical pricing patterns, which can help inform economic policy decisions and help businesses make more informed decisions.