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Empirical Evidence on the Role of Non Linear Wholesale Pricing and Vertical Restraints on Cost Pass-Through

  • Bonnet, Céline
  • Dubois, Pierre
  • Villas Boas, Sofia B.

How a cost shock is passed through to final consumer prices may relate to nominal price stickiness and rigidities, the existence of nonadjustable cost components, strategic markup adjustments, or other contract terms along the supply distribution chain. This paper presents a simple framework to assess the potential role of nonlinear pricing contracts and vertical restraints, such as resale price maintenance or wholesale price discrimination in the supply chain, in explaining the degree of pass-through from upstream cost shocks in the ground coffee category to downstream retail prices. We find that resale price maintenance increases pass-through rate. © 2013 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 09-067.

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Date of creation: Jul 2009
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Publication status: Published in The Review of Economics and Statistics, mai 2013, p.�500-515.
Handle: RePEc:tse:wpaper:21956
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  1. José Manuel Campa & Linda S. Goldberg, 2005. "Exchange Rate Pass-Through into Import Prices," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 679-690, November.
  2. Pinelopi K. Goldberg & Rebecca Hellerstein, 2007. "A framework for identifying the sources of local currency price stability with an empirical application," Staff Reports 287, Federal Reserve Bank of New York.
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  4. José Manuel Campa & Linda S. Goldberg & José M. González-Mínguez, 2005. "Exchange-Rate Pass-Through to Import Prices in the Euro Area," NBER Working Papers 11632, National Bureau of Economic Research, Inc.
  5. Bonnet, Céline & Dubois, Pierre, 2008. "Inference on Vertical Contracts between Manufacturers and Retailers Allowing for Non Linear Pricing and Resale Price Maintenance," CEPR Discussion Papers 6918, C.E.P.R. Discussion Papers.
  6. Jose Manuel Campa & Linda S. Goldberg, 2008. "Pass-Through of Exchange Rates to Consumption Prices: What Has Changed and Why?," NBER Chapters, in: International Financial Issues in the Pacific Rim: Global Imbalances, Financial Liberalization, and Exchange Rate Policy (NBER-EASE Volume 17), pages 139-176 National Bureau of Economic Research, Inc.
  7. Villas-Boas, Sofia B, 2006. "An empirical investigation of the welfare effects of banning wholesale price discrimination," CUDARE Working Paper Series 1017R3, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy, revised Oct 2008.
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