Cost pass-through and inverse demand curvature in vertical relationships with upstream and downstream competition

Takanori Adachi and Takeshi Ebina

Economics Letters, 2014, vol. 124, issue 3, 465-468

Abstract: This paper provides two characterizations of the retailer’s markup relative to the manufacturer’s markup in vertical relationships with homogeneous manufacturers and homogeneous retailers. We first show that retailer’s relative markup is equal to the ratio of the retail pass-through to the wholesale pass-through, multiplied by the number of manufacturers relative to the number of retailers. We then provide its expression in terms of the inverse demand curvature.

Keywords: Cost pass-through; Inverse demand curvature; Cournot competition (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:124:y:2014:i:3:p:465-468

DOI: 10.1016/j.econlet.2014.07.008

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