Empirical evidence on the role nonlinear wholesale pricing and vertical restraints on cost pass-trough

Céline Bonnet, Pierre Dubois, Sofia Villas-Boas and Daniel Klapper
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Daniel Klapper: Goethe-Universität Frankfurt am Main

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Abstract: How a cost shock is passed through to final consumer prices may relate to nominal price stickiness and rigidities, the existence of nonadjustable cost components, strategic markup adjustments, or other contract terms along the supply distribution chain. This paper presents a simple framework to assess the potential role of nonlinear pricing contracts and vertical restraints, such as resale price maintenance or wholesale price discrimination in the supply chain, in explaining the degree of pass-through from upstream cost shocks in the ground coffee category to downstream retail prices. We find that resale price maintenance increases pass-through rate.

Keywords: MARKET; MAINTENANCE; CONTRACTS; INFERENCE; INDUSTRY; EXCHANGE-RATE; MANUFACTURERS; PRICES; MODELS; RETAILERS (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (42)

Published in Review of Economics and Statistics, 2013, 95 (2), pp.500 - 515

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02643672

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