There is a retail sector which buys wholesale goods and diversifies them. Retailers sell these differentiated goods in a monopolistically competitive market at price . Retailers only face quadratic price adjustment costs (see appendix). This introduces nominal rigidities in this economy and in a symmetric equilibrium, inflation dynamics is given by a standard New Keynesian Phillips curve
(19)
where is real marginal cost in the wholesale sector.
. Retailers only face quadratic price adjustment costs (see appendix). This introduces nominal rigidities in this economy 
is real marginal cost in the wholesale sector.