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Product Differentiation and Cost Pass‐Through

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  • Jens‐Peter Loy
  • Christoph Weiss

Abstract

The present paper extends the existing literature on vertical price transmission and cost pass‐through by investigating the impact of product differentiation. We apply distance‐measures of product differentiation to a specific product market (yoghurt) within one country (Germany). Results from a panel‐error‐correction model for 30 products sold in 432 stores over a period of 312 weeks suggest that product differentiation explains a significant share of differences in cost pass‐through rates: more differentiated products command higher prices and are characterised by lower equilibrium cost pass‐through rates as well as more sluggish price adjustment.

Suggested Citation

  • Jens‐Peter Loy & Christoph Weiss, 2019. "Product Differentiation and Cost Pass‐Through," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(3), pages 840-858, September.
    • Handle: RePEc:bla:jageco:v:70:y:2019:i:3:p:840-858
    DOI: 10.1111/1477-9552.12320
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    Cited by:

    1. Weiss, Christoph, 2020. "Preisbildung bei unvollkommener Konkurrenz," IAMO Discussion Papers 305467, Institute of Agricultural Development in Transition Economies (IAMO).
    2. Bittmann, Thomas & Bronnmann, Julia & Gordon, Daniel V., 2020. "Product differentiation and dynamics of cost pass-through in the German fish market: An error-correction-distance measure approach," Journal of Commodity Markets, Elsevier, vol. 19(C).
    3. repec:zbw:iamodp:305467 is not listed on IDEAS

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