Asymmetric Cost Pass-Through? Empirical Evidence on the Role of Market Power, Search and Menu Costs

Jens-Peter Loy, Thomas Glauben and Christoph Weiss

No 212156, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: We estimate cost pass-through rates based on data for store-level retail prices and wholesale costs. The data allows us to identify heterogeneity in cost pass-through across retailers and relate it to underlying explanatory factors such as retailer market power, measures of consumer search and menu costs. Results from a threshold-errorcorrection- model clearly provide empirical support for the ‘rockets and feathers’ phenomenon. In contrast to much of the literature which explains the ‘rockets and feathers’ phenomenon as a result of retailers’ market power, we find contrary find that the degree of asymmetry between costs and prices is negatively related to a measure of market power.

Keywords: Agricultural and Food Policy; Consumer/Household Economics (search for similar items in EconPapers)
Pages: 15
Date: 2015
New Economics Papers: this item is included in nep-com, nep-pke and nep-reg
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Journal Article: Asymmetric cost pass-through? Empirical evidence on the role of market power, search and menu costs (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:212156

DOI: 10.22004/ag.econ.212156

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