The Review of Economics and Statistics Vol. 82 No. 2 2000
Cost Pass-Through in the U.S. Automobile Market
Abstract
We study cost pass-through in the U.S. automobile market using a framework that incorporates the effects of cost changes on input decisions. We find that accounting for firms' factor-market decisions significantly increases measured cost pass-through, although we reject the hypothesis of full cost pass-through and constant markups. In addition, our evidence suggests that cost shocks common to all manufacturers have a greater effect on prices than do model-specific cost shocks. Finally, we examine how pass-through varies with manufacturer nationality, finding that U.S. firm cost pass-through exceeds that of European and Asian firms.
- DOI
- 10.1162/003465300558704
- Volume
- 82
- Issue
- 2
- Pages
- 316-324
- Language
- en
- Sources
- openalex crossref