Seasonal asymmetries in wholesale–retail cost pass-through

Thomas Bittmann and Sven Anders

Applied Economics Letters, 2016, vol. 23, issue 15, 1065-1068

Abstract: This article investigates the extent of seasonal asymmetries in wholesale to retail cost pass-through in the Canadian apple market. We model nonlinearity in cost pass-through in a panel two-regime error correction model. The model employs weekly store-level retail matching wholesale price data for a major US retail chain. Our results reveal distinct seasonal asymmetries in cost pass-through. Retail prices adjust faster during the fall indicating significantly higher pass-through in response to a change in input composition and seasonal expansion of alternative marketing channels. This input composition effect on cost pass-through highlights the general importance of time-variant market conditions and their respective determinants in explaining cost pass-through dynamics in commodity markets.

Date: 2016
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DOI: 10.1080/13504851.2015.1133891

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