Hong and Li meet Weyl and Fabinger: Modeling vertical structure by the conduct parameter approach

Takanori Adachi

Economics Letters, 2020, vol. 186, issue C

Abstract: By using Weyl and Fabinger’s (2013) conduct parameter approach, this note extends Hong and Li’s (2017) model of vertical structure to include downstream and upstream competition, and thereby generalizes the formula for cost pass-through elasticity. Three channels are identified through which downstream and upstream competition affect the cost pass-through elasticity, and it is argued that competition generally has an ambiguous effect.

Keywords: Vertical relationships; Conduct parameter; Cost pass-through (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:186:y:2020:i:c:s0165176519303684

DOI: 10.1016/j.econlet.2019.108732

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