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The Price of Delay: Supply Chain Disruptions and Pricing Dynamics

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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 US 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.

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  • Salomé Baslandze & Simon Fuchs, 2025. "The Price of Delay: Supply Chain Disruptions and Pricing Dynamics," FRB Atlanta Working Paper 2025-8, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:101962
    DOI: 10.29338/wp2025-08
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    1. Ascari, Guido & Bonam, Dennis & Smadu, Andra, 2024. "Global supply chain pressures, inflation, and implications for monetary policy," Journal of International Money and Finance, Elsevier, vol. 142(C).
    2. Salomé Baslandze & Simon Fuchs & KC Pringle & Michael Sparks, 2025. "Tariffs and Consumer Prices: Insights from Newly Matched Consumption-Trade Micro Data," Policy Hub, Federal Reserve Bank of Atlanta, vol. 2025(1), pages 1-17, February.
    3. Meyer, Brent H. & Prescott, Brian C. & Sheng, Xuguang Simon, 2023. "The impact of supply chain disruptions on business expectations during the pandemic," Energy Economics, Elsevier, vol. 126(C).
    4. Cavallo, Alberto & Kryvtsov, Oleksiy, 2023. "What can stockouts tell us about inflation? Evidence from online micro data," Journal of International Economics, Elsevier, vol. 146(C).
    5. Xiwen Bai & Jesús Fernández-Villaverde & Yiliang Li & Francesco Zanetti, 2024. "The Causal Effects of Global Supply Chain Disruptions on Macroeconomic Outcomes: Evidence and Theory," Economics Series Working Papers 1033, University of Oxford, Department of Economics.
    6. Ernest Liu & Vladimir Smirnyagin & Aleh Tsyvinski, 2024. "Supply Chain Disruptions and Supplier Capital in U.S. Firms," Cowles Foundation Discussion Papers 2402, Cowles Foundation for Research in Economics, Yale University.
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    Cited by:

    1. 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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    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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