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Pass-through, vertical contracts, and bargains

Author

Listed:
  • Germain Gaudin

    (Heinrich Heine Universität Düsseldorf = Heinrich Heine University [Düsseldorf])

Abstract

This paper analyzes the determinants of pass-through that are specific to vertical relationships between wholesalers and retailers. Fluctuations in input costs (due to, e.g., exchange rate shocks) are transmitted first to the wholesale price, and then to the retail price. The type of vertical agreement firms contract upon as well as their relative bargaining power are identified as major determinants of pass-through rates. The relationship between passthrough rates at the wholesale and retail levels is also investigated. Finally, the result of Bresnahan and Reiss (1985) on markup ratio is extended to the case where firms bargain over the wholesale price.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Germain Gaudin, 2016. "Pass-through, vertical contracts, and bargains," Post-Print hal-02410488, HAL.
  • Handle: RePEc:hal:journl:hal-02410488
    DOI: 10.1016/j.econlet.2015.11.043
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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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