Competitive Prices and Asymmetric Cost Behavior for Iraqi Firms: Capacity Utilization as a Moderator

Abstract

Prior literature on asymmetric cost behavior mainly focuses on internal factors. While information knowledge considers that managers should use both internal and external factors when making strategic cost decisions. In this study, the purpose is to provide an alternative examination that investigates the relationship between asymmetric cost behavior and competitive price as an external competition factor. The results find that cost stickiness is pronounced for firms in an industry competition with managerial optimism, whereas cost anti-stickiness is pronounced for firms in an industry competition with managerial pessimism when managers like to utilize their resources. The findings suggest that the asymmetric cost behavior is affected by competitive price as an external competition factor as well as internal factors, stressing the importance of using cost stickiness model specification to gain insights about managers' pricing decisions.