Variety pass-through: An examination of the ready-to-eat breakfast cereal market

Timothy Richards, Stephen F. Hamilton

Research output: Contribution to journalArticlepeer-review

17 Scopus citations

Abstract

We examine variety pass-through effects that occur when multiproduct retailers adjust the length of their product lines in response to changes in wholesale prices. Studying variety pass-through is essential to understanding how wholesale price changes transmit into retail prices when variety is endogenous. Using data from the ready-to-eat breakfast cereal category, we find that retailers jointly adjust retail prices and the length of their product lines in response to changes in wholesale prices. We show the importance of controlling for the endogeneity of retailers' product line decisions when calculating price pass-through rates.

Original languageEnglish (US)
Pages (from-to)166-179
Number of pages14
JournalReview of Economics and Statistics
Volume97
Issue number1
DOIs
StatePublished - Mar 1 2015

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

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