T HIS study investigates rates of price response to changes in cost and demand over the period I947 to I958 in fourteen United States industries, half of which are classified as concentrated, half as unconcentrated. The industries studied are: tires and tubes, rubber footwear, glass containers, plumbing fixtures, internal combustion engines, agricultural machinery, motors and generators (concentrated); bituminous coal mining, cotton broadwovens, seamless hosiery, leather footwear, gray iron foundries, construction and mining machinery, valves and fittings (unconcentrated). The primary purpose of the investigation is to test the hypothesis that inflationary pressures are transmitted through concentrated industries at a different rate than through unconcentrated industries. A secondary purpose is to estimate the degree to which prices are insensitive to demand change under varied conditions of concentration in manufacturing industries. For each industry in the sample, monthly indexes of output price and direct costs were constructed from Bureau of Labor Statistics data, using weights derived primarily from information in the Leontief input-output table; B.L.S. data on the average number of hours worked per week in each industry were used to estimate demand changes in each industry. Multiple regression analysis was employed to study the relationship between price change and change in the other variables. Response to cost change was examined on a monthly basis, using a distributed lag technique to estimate the total response pattern from the month preceding a cost increase to the second month following. Response to demand change was estimated only on a quarterly basis, since preliminary findings indicated that little would be gained by more detailed analysis. Surprisingly little difference was found between the two groups of industries. In the concentrated group price response to demand change did not appear at all; in the unconcentrated group such response was quite limited, explaining only two per cent of the variation in price change. Response patterns to cost change in the two groups of industries were even more similar. Standard statistical tests indicated that all differences between the two groups in this aspect of behavior could easily have resulted from chance; the hypothesis that response patterns for the two groups were identical could not be rejected at a 50 per cent level of confidence. For both groups of industries the lag between cost change and price change was short generally not longer than one month. The magnitude of response was generally sufficient to maintain pre-existing percentage gross margins. Examination of the behavior of gross margins supported these conclusions, as margins remained relatively stable through periods of both recession and inflation, until I956-58 when they rose for a number of industries, especially in the concentrated group. These findings suggest that insensitivity of prices to demand change is not confined to highly oligopolistic industries, but is characteristic of most manufacturing industries. On the whole, inflationary pressures seemed to be transmitted through the two groups of industries in a similar manner: prices were insensitive to demand changes, but were rapidly and fully responsive to cost increases. The investigation did not attempt to ascertain the sources of inflationary pressure but was focused on the mechanics of price change. Thus the concept of price flexibility employed is similar to that of Gardiner Means in his I935 study, Industrial Prices and Their Relative In-