The present paper extends the existing literature on vertical price transmission and cost pass‐through by investigating the impact of product differentiation. We apply distance‐measures of product differentiation to a specific product market (yoghurt) within one country (Germany). Results from a panel‐error‐correction model for 30 products sold in 432 stores over a period of 312 weeks suggest that product differentiation explains a significant share of differences in cost pass‐through rates: more differentiated products command higher prices and are characterised by lower equilibrium cost pass‐through rates as well as more sluggish price adjustment.
|Pages (from-to)||840 - 858|
|Journal||Journal of Agricultural Economics|
|Publication status||Published - 2019|
Austrian Classification of Fields of Science and Technology (ÖFOS)
- 405002 Agricultural economics