Variety Pass-Through: An Examination of the Ready-to-Eat Breakfast Cereal Market

Timothy J. Richards () and Stephen Hamilton
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Timothy J. Richards: Arizona State University

The Review of Economics and Statistics, 2015, vol. 97, issue 1, 166-180

Abstract: We examine variety pass-through effects that occur when multiproduct retailers adjust the length of their product lines in response to changes in wholesale prices. Studying variety pass-through is essential to understanding how wholesale price changes transmit into retail prices when variety is endogenous. Using data from the ready-to-eat breakfast cereal category, we find that retailers jointly adjust retail prices and the length of their product lines in response to changes in wholesale prices. We show the importance of controlling for the endogeneity of retailers’ product line decisions when calculating price pass-through rates. © 2015 The President and Fellows of Harvard College and the Massachusetts Institute of Technology

Keywords: pass-through effects; multiproduct retailers; retail prices; wholesale prices; ready-to-eat breakfast cereal (search for similar items in EconPapers)
JEL-codes: G10 G12 M30 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (19)

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