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Firm-Level Pass-Through of Supply Chain Disruptions: Insights from the U.S. Beef Market

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Abstract

We leverage a fire outbreak that caused a large but temporary capacity loss at the largest U.S. beef packer to study how firm conduct shapes the pass-through of supply disruptions along the supply chain. Despite evidence of industry-wide increases in processing costs, retail prices for the affected packer’s products fell. To rationalize this pattern, we develop a model of bilateral retailer-packer bargaining that accounts for reliability of product delivery. The model highlights how disruptions alter bargaining leverage and shift margins between buyer and seller. Counterfactual simulations demonstrate that the sign and magnitude of pass-through are highly sensitive to the magnitude of capacity loss and perceived reliability.

Suggested Citation

  • Marco Duarte & Meilin Ma & Francisco Scott, 2025. "Firm-Level Pass-Through of Supply Chain Disruptions: Insights from the U.S. Beef Market," Research Working Paper RWP 25-20, Federal Reserve Bank of Kansas City.
    • Handle: RePEc:fip:fedkrw:102167
    DOI: 10.18651/RWP2025-20
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    JEL classification:

    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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