Cost Pass-Through in the U.S. Automobile Market

Anne Gron; Deborah L. Swenson

doi:10.1162/003465300558704

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Cost Pass-Through in the U.S. Automobile Market

Anne Gron¹; Deborah L. Swenson²

¹ Northwestern University · ² University of California, Davis

The Review of Economics and Statistics 2000

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 (2)
Pages: 316-324
Language: en
Export: BibTeX
Sources: openalex crossref