Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189396 
Year of Publication: 
2006
Series/Report no.: 
Queen's Economics Department Working Paper No. 1120
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
Consumer prices are not very responsive to movements in nominal exchange rates and their response has fallen in Canada since the mid 1980s. This paper explores two of the most likely explanations for this decline in exchange rate pass-through to consumer prices: (1) lower inflation and (2) restructuring in the retail sector. We believe that both explanations are important but our primary focus in this paper is on the second explanation. We discuss the restructuring that has occurred in Canadian retail and trends in mark-ups and concentration in that sector. We argue that to understand these trends, it is important to examine pass-through in industrial organization models with strategic elements. Finally, we present a series of such models and evaluate the effects of various forms of restructuring on mark-ups, concentration, and exchange rate pass-through.
Subjects: 
Pass-Through
Restructuring
Strategic Pricing
Mark-ups
Exchange Rates
Imperfect Competition
JEL: 
D40
F15
F31
F41
L16
Document Type: 
Working Paper

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