Understanding Cost Pass-Through when Prices are Dispersed
16 Oct 2024
17:00 -18:00
Times are shown in local time.
Open to: All
Room W2.02 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Economics and Policy seminar
Speaker: Dr Luke Garrod, Loughborough University
About the seminar topic
Understanding how cost changes impact prices is fundamental for many areas of economics, but there is limited theoretical understanding of the determinants of pass-through within settings where prices are dispersed. Under a general demand function, we analyse cost pass-through within a seminal model of price dispersion where consumers vary in their level of market engagement (Varian 1980). We show how the curvature of demand remains key in understanding cost pass-through.
Specifically, we find that demand curvature affects:
- whether expected pass-through rates are less or greater than one
- whether price dispersion increases or decreases following a cost rise
- whether a cost increase will have a greater impact on the prices paid by more or less engaged consumers
- how competition affects cost pass-through
Speaker bio
Dr Luke Garrod is a Senior Lecturer in Economics at Loughborough University, where his research focuses on industrial organisation, competition economics, and applied microeconomics. He specialises in the study of firm behaviour in oligopolistic markets, the effectiveness of competition policy, and the design of market regulation.
His work includes both theoretical modelling and empirical analysis, often addressing issues related to collusion, mergers, and pricing strategies. He received the International Journal of Industrial Organization Best Theoretical Paper Award 2019 for work on explicit vs tacit collusion.
Register
No registration required. If you have any questions about this seminar, please email Emily Brown.