Retailers and Consumers: The pass-through of import price changes

Eike Berner, Laura Birg and Dominik Boddin

No 133 [rev.], University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: In this paper, we estimate pass-through rates of import price changes to retail prices across retailers and consumers for apparel purchases in Germany for the period of 2000 to 2007. We find that high-price retailers do not pass through changes in the import price. Pass-through rates for low-price retailers are 53% within 3 months. Consequently, pass-through rates for low-income households are 58%, significantly larger than those for high-income households. We then present one possible explanation for these observations in a theoretical model with endogenous vertical product differentiation due to bundling an ex-ante homogeneous import good with services. Following an import price change, retailers who sell a cheaper unbundled product change prices to a greater extent than retailers who sell a higher-priced bundle of product and service.

Keywords: import prices; pass-through; retailers; households (search for similar items in EconPapers)
JEL-codes: D12 D31 F10 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-mkt and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.econstor.eu/bitstream/10419/142182/1/861754948.pdf (application/pdf)

Related works:
Journal Article: Retailers and Consumers: The Pass-through of Import Price Changes (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:133r

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