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The Price of Delay: Supply Chain Disruptions and Pricing Dynamics

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  • Baslandze, Salomé
  • Fuchs, Simon

Abstract

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 microlevel 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.

Suggested Citation

  • Baslandze, Salomé & Fuchs, Simon, 2025. "The Price of Delay: Supply Chain Disruptions and Pricing Dynamics," CEPR Discussion Papers 20589, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:20589
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    Cited by:

    1. is not listed on IDEAS
    2. Elliott, M. & Jackson, M. O., 2024. "Supply Chain Disruptions, the Structure of Production Networks, and the Impact of Globalization," Cambridge Working Papers in Economics 2424, Faculty of Economics, University of Cambridge.

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    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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