IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-16-00399.html
   My bibliography  Save this article

A tractable cost pass-through benchmark

Author

Listed:
  • Bertram Neurohr

    (Oxera)

Abstract

Under the assumptions of constant marginal costs, linear demand and symmetric cross-price effects, the equilibrium rates at which firms pass cost changes through to prices can be calculated from diversion ratios. The resulting pass-through benchmark makes it possible to capture market asymmetries and can easily be extended to cover not just the conventional cases of firm-specific and industrywide cost changes but also cases where some but not all firms face a cost change and where the degree of exposure to the cost change varies between firms. As such the benchmark is more accurate and adaptable than existing benchmarks and also has a number of practical advantages vis-Ã -vis more complex approaches.

Suggested Citation

  • Bertram Neurohr, 2016. "A tractable cost pass-through benchmark," Economics Bulletin, AccessEcon, vol. 36(3), pages 1603-1608.
  • Handle: RePEc:ebl:ecbull:eb-16-00399
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I3-P157.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. FRANK VERBOVEN & THEON van DIJK, 2009. "Cartel Damages Claims And The Passing‐On Defense," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 457-491, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Neurohr, Bertram, 2018. "A merger approach to cartel overcharge analysis," Economics Letters, Elsevier, vol. 168(C), pages 28-30.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Boone, Jan & Müller, Wieland, 2012. "The distribution of harm in price-fixing cases," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 265-276.
    2. Li, Yumin, 2018. "Incentive pass-through in the California Solar Initiative – An analysis based on third-party contracts," Energy Policy, Elsevier, vol. 121(C), pages 534-541.
    3. Willem H. Boshoff, 2015. "Illegal Cartel Overcharges in Markets with a Legal Cartel History: Bitumen Prices in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 220-239, June.
    4. Neurohr, Bertram, 2018. "A merger approach to cartel overcharge analysis," Economics Letters, Elsevier, vol. 168(C), pages 28-30.
    5. Holler, Emanuel & Rickert, Dennis, 2022. "How resale price maintenance and loss leading affect upstream cartel stability: Anatomy of a coffee cartel," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    6. Roman Inderst & Frank Maier-Rigaud & Ulrich Schwalbe, 2013. "Quantifizierung von Schäden durch Wettbewerbsverstöße," Working Papers 2013-ECO-08, IESEG School of Management.
    7. Frank P. Maier-Rigaud, 2014. "Toward A European Directive On Damages Actions," Journal of Competition Law and Economics, Oxford University Press, vol. 10(2), pages 341-360.
    8. Robert A Ritz, 2024. "Does competition increase pass‐through?," RAND Journal of Economics, RAND Corporation, vol. 55(1), pages 140-165, March.
    9. Sovinsky, Michelle & Helland, Eric, 2019. "Do Research Joint Ventures Serve a Collusive Function?," CEPR Discussion Papers 13533, C.E.P.R. Discussion Papers.
    10. Ulrich Laitenberger & Florian Smuda, 2015. "Estimating Consumer Damages In Cartel Cases," Journal of Competition Law and Economics, Oxford University Press, vol. 11(4), pages 955-973.
    11. Moresi, Serge & Zenger, Hans, 2018. "Recapture ratios in merger analysis," Economics Letters, Elsevier, vol. 170(C), pages 136-138.
    12. Doose, Anna Maria, 2013. "Methods for calculating cartel damages: A survey," Ilmenau Economics Discussion Papers 83, Ilmenau University of Technology, Institute of Economics.
    13. Basso, Leonardo J. & Ross, Thomas W., 2019. "On the harm from mergers in input markets," Economics Letters, Elsevier, vol. 178(C), pages 70-76.
    14. Philip G. Gayle & Ying Lin, 2021. "Cost Pass‐Through In Commercial Aviation: Theory And Evidence," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 803-828, April.
    15. Duran-Micco, Elisa & Perloff, Jeffrey M., 2022. "How large are double markups?," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    16. Sander Heinsalu, 2023. "Bounds on the damages from a price overcharge," Economics Bulletin, AccessEcon, vol. 43(3), pages 1265-1270.
    17. Garrod, Luke & Han, Tien-Der Jerry & Harvey, James & Olczak, Matthew, 2023. "Cartel Damages Claims, Passing-On and Passing-Back," MPRA Paper 116471, University Library of Munich, Germany.
    18. Beschorner, Patrick Frank Ernst & Hüschelrath, Kai, 2009. "Ökonomische Aspekte der privaten Durchsetzung des Kartellrechts," ZEW Discussion Papers 09-075, ZEW - Leibniz Centre for European Economic Research.
    19. Damien Neven & Hans Zenger, 2008. "Ex Post Evaluation of Enforcement: A Principal-Agent Perspective," De Economist, Springer, vol. 156(4), pages 477-490, December.
    20. Dagoumas, Athanasios S. & Polemis, Michael L., 2020. "Carbon pass-through in the electricity sector: An econometric analysis," Energy Economics, Elsevier, vol. 86(C).

    More about this item

    Keywords

    pass-through; asymmetry; diversion ratios; differentiated products; umbrella effects; asymmetric cost changes;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L4 - Industrial Organization - - Antitrust Issues and Policies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-16-00399. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.