That’s not the analog; the analog would be the externality effect. An individual lowering (excessively high) prices imposes a loss on themselves but creates a positive externality on all other individuals; since the externality is never internalized, price adjustment is underprovided. If price adjustment is costly, the problem is even worse.
Wages are not thought to be sticky for this reason (real wages are not as obviously anticyclical as the argument would imply.).
That’s not the analog; the analog would be the externality effect. An individual lowering (excessively high) prices imposes a loss on themselves but creates a positive externality on all other individuals; since the externality is never internalized, price adjustment is underprovided. If price adjustment is costly, the problem is even worse.
Wages are not thought to be sticky for this reason (real wages are not as obviously anticyclical as the argument would imply.).