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

Céline Bonnet¹; Pierre Dubois¹; Sofia B. Villas Boas; Daniel Klapper²

¹ Toulouse School of Economics · ² Goethe University Frankfurt

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.

DOI

10.1162/rest_a_00267

Volume

95 (2)

Pages

500-515

Language

en

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