Impact of cost shocks on consumer prices in vertically-related markets: the case of the French soft drink market

Céline Bonnet and Vincent Réquillart

Post-Print from HAL

Abstract: We develop a structural econometric model of the vertical contracts between soft drink manufacturers and retailers to assess the impact of taxes or changes in production costs on consumer prices. Using individual data on food purchases from a representative survey of 19,000 French households in 2005, we estimate consumer demand using a random utility approach. Among a set of possible vertical relationships, we select the model that best fits the data. We evaluate the pass-through rate of changes in input costs (sugar) or of taxes and show that the industry over-shifts cost changes or excise taxes to the consumers. This result challenges the belief that firms do not pass on the full extent of cost changes or excise taxes to consumers.

Keywords: differentiated products; pass-through; two-part tariffs; competition; soft drinks; vertical contracts (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Published in American Journal of Agricultural Economics, 2013, 95 (5), pp.1088-1108. ⟨10.1093/ajae/aat055⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Impact of Cost Shocks on Consumer Prices in Vertically-Related Markets: The Case of The French Soft Drink Market (2013)
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:hal:journl:hal-02646844

DOI: 10.1093/ajae/aat055

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().