https://macropaperwarehouse.com/authors/george-nikolakoudis/George NikolakoudisHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/a-theory-of-supply-function-choice-and-aggregate-supply/https://macropaperwarehouse.com/papers/a-theory-of-supply-function-choice-and-aggregate-supply/<p>Modern macroeconomic models of aggregate supply universally restrict firms to price-setting — committing to a price and supplying whatever quantity the market demands. Flynn, Nikolakoudis, and Sastry ask: what happens if instead firms choose any supply function, a mapping that describes the price charged at each quantity of production? The paper develops the first general-equilibrium, macroeconomic theory of supply function choice and characterizes its implications for the slope of aggregate supply, monetary non-neutrality, and time-varying inflation-output tradeoffs.</p>