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Empirical evidence on the role of non linear wholesale pricing and vertical restraints on cost pass-through

  • Bonnet, Celine
  • Dubois, Pierre
  • Villas-Boas, Sofia B.

    ()

    (University of California, Berkeley. Dept of agricultural and resource economics)

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. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1089.

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Length: 24 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:are:cudare:1089
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