Authors: George Peppas, Augustinos Dimitras, Evaggelos Koumanakos

Title: Cost stickiness using a quantile regression approach: evidence from Europe

Abstract

Cost functions as the foundation of managerial decision making usually assume a linear cost function with fixed and variable costs. The latter are dominantly regarded as being identical for increasing and for decreasing activity levels. However, empirical research shows that the decline in costs is smaller for decreasing than the rise in costs for increasing activity levels for the same amount of change. This effect of asymmetric cost behavior is called ‘cost stickiness’ or ‘cost remanence’. Our paper we use a quantile regression approach and we provide evidence that the stickiness part is not symmetrical.