Cost pass-through elasticities, concentration and productivity growth

Vaughan Dickson ()

Applied Economics Letters, 2010, vol. 17, issue 7, 663-666

Abstract: Cost pass-through elasticities measure the percentage decrease in prices from a percentage cost reduction. For given cost reductions, lower elasticities harm consumers through a lower pass-through to prices. But these same lower elasticities may increase cost-reducing innovation by firms and thereby help consumers by leading to lower prices. To explore this trade-off, pass-through elasticities are first estimated for 253 US manufacturing industries. After this, two second-stage regressions that use the estimated elasticities are introduced. The first regression finds that higher seller concentration leads to lower pass-through elasticities, whereas the second finds that the lower pass-through elasticities, which accompany higher concentration, lead to higher average annual productivity growth. This means there is a trade-off, and lower elasticities can benefit consumers.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.informaworld.com/openurl?genre=article& ... 40C6AD35DC6213A474B5 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:17:y:2010:i:7:p:663-666

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504850802297962

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().