The Price of Delay: Supply Chain Disruptions and Pricing Dynamics

We study the role of supply chain disruptions in shaping consumer prices, focusing on both firms’ own import shocks and strategic responses to competitors’ disruptions. Using a newly constructed micro-level dataset that links transaction-level U.S. import data from Bills of Lading with high-frequency consumer prices and sales from a consumer panel, we develop a novel approach to estimate the price effects of cost shocks and product availability. Motivated by a model of delivery delays, cost shocks, and firm pricing, we implement a shift-share identification strategy based on delivery shortfalls, port congestion, and freight and import costs. We find sizable pass-through elasticities: firms raise prices in response to higher import costs and delivery delays, especially when disruptions persist. We also identify strategic pricing: firms—including non-importers—increase prices in response to competitors’ supply chain disruptions. Using our estimates and back-of-the-envelope calculations from the model, we show that strategic interactions significantly amplified the direct effects of supply chain shocks on consumer prices during the pandemic.