TY - JOUR
T1 - Variety pass-through
T2 - An examination of the ready-to-eat breakfast cereal market
AU - Richards, Timothy
AU - Hamilton, Stephen F.
N1 - Publisher Copyright:
© 2015 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
PY - 2015/3/1
Y1 - 2015/3/1
N2 - 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.
AB - 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.
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U2 - 10.1162/REST_a_00447
DO - 10.1162/REST_a_00447
M3 - Article
AN - SCOPUS:84924266626
SN - 0034-6535
VL - 97
SP - 166
EP - 179
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 1
ER -