Does competition increase pass-through?

• 成果类型: Article
• 署名作者: Ritz, Robert A.
• 署名单位: University of Cambridge
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12461
• 发表日期: 2024
• 页码: 140-165
• 关键词: tax incidence; cost changes; EFFICIENCY; industry; bertrand

摘要

In recent years, the literature has seen a surge of interest in pass-through as an economic tool. At the same time, widespread concerns have emerged about the rising market power of firms. How does competition affect pass-through? A standard intuition is that more competition makes prices more cost-reflective and hence raises the rate of cost pass-through. This article shows this conclusion is sensitive to the routine assumption that firms' marginal costs are constant. With modestly convex costs, market power can raise pass-through (even when it lies below 1). These results have implications for antitrust policy, environmental regulation, and welfare analysis.