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

75 Pages Posted: 1 Oct 2017

See all articles by Celine Bonnet

Celine Bonnet

GREMAQ, INRA

Pierre Dubois

University of Toulouse 1 - Toulouse School of Economics (TSE)

Sofia Berto Villas-Boas

University of California, Berkeley - Agricultural & Resource Economics

Daniel Klapper

Humboldt University Berlin - School of Business and Economics

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Date Written: August 2011

Abstract

How a cost shock is passed through into final consumer prices may relate to nominal price stickiness and rigidities, the existence of non adjustable cost components, strategic mark-up adjustments, or other contract terms along the supply distribution chain. This paper presents a simple framework to assess the potential role of non linear 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.

Suggested Citation

Bonnet, Celine and Dubois, Pierre and Villas-Boas, Sofia and Klapper, Daniel, Empirical Evidence on the Role of Non Linear Wholesale Pricing and Vertical Restraints on Cost Pass-Through (August 2011). Review of Economics and Statistics, 2011, Available at SSRN: https://ssrn.com/abstract=3044648

Celine Bonnet

GREMAQ, INRA ( email )

Place Anatole France
Toulouse Cedex, F-31042
France

Pierre Dubois

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

Sofia Villas-Boas (Contact Author)

University of California, Berkeley - Agricultural & Resource Economics ( email )

310 Giannini Hall # 3310
Berkeley, CA 94720
United States
510-643-6359 (Phone)
510-643-8911 (Fax)

Daniel Klapper

Humboldt University Berlin - School of Business and Economics ( email )

Spandauer Str.1
Berlin, Berlin 10178
Germany

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