Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/142182
Authors: 
Berner, Eike
Birg, Laura
Boddin, Dominik
Year of Publication: 
2016
Series/Report no.: 
Discussion Papers, Center for European, Governance and Economic Development Research 133 [rev.]
Abstract: 
In this paper, we estimate pass-through rates of import price changes to retail prices across retailers and consumers for apparel purchases in Germany for the period of 2000 to 2007. We find that high-price retailers do not pass through changes in the import price. Pass-through rates for low-price retailers are 53% within 3 months. Consequently, pass-through rates for low-income households are 58%, significantly larger than those for high-income households. We then present one possible explanation for these observations in a theoretical model with endogenous vertical product differentiation due to bundling an ex-ante homogeneous import good with services. Following an import price change, retailers who sell a cheaper unbundled product change prices to a greater extent than retailers who sell a higher-priced bundle of product and service.
Subjects: 
import prices
pass-through
retailers
households
JEL: 
D12
D31
F10
Document Type: 
Working Paper

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