The assumption that nominal price adjustment is costly for firms (there are "menu costs") has generated a stream of important theoretical papers over the last decade or so. 1 In so far as this literature generates asymmetric adjustments, it provides a theoretical underpinning for the (old)Keynesian assumption that nominal prices are more flexible upward than downward. 2Yet, the empirical evidence, while confirming that asymmetri es exist, does not indicate the dominance of any particular form of asymmetry (see Dennis W. Carlton, 1986; Alan S. Blinder, 1991).In this paper we argue that the gap between theory and practice may be the result of the focus of menucost models on specific forms of market structure.Existing menu -cost models are based on the assumption of relatively uncompetitive market structures -monopoly, oligopoly, or monopolistic competition with a fixed number of firms.We widen the scope of the analysis by examining what we call a quasi-competitive industry and demonstrate that it displays a pattern of adjustment quite different from that found in other models.The Keynesian asymmetry is reversed, with nominal price being more flexible downward than upward. 3 We suggest therefore that a relationship exists between market structure and the pattern of nominal price adjustment.Since there is presumably a variety of market structures, this may help explain the inconclusive empirical evidence.We model the most competitive market configuration compatible with menu costs:Bertrand oligopoly in a dynamic setting with free entry.It is assumed that (a) an incumbent in one period can continue to sell at its existing nominal price in the next period without incurring any additional menu cost, whereas an entrant would have to incur a menu cost; and (b) among the firms willing to sell at the lowest price in any given period, one is chosen randomly to sell the