Template-type: ReDIF-Paper 1.0
Author-Name: Ronald W.Cotterill
Author-Name-First: Ronald
Author-Name-Last: Cotterill
Author-Workplace-Name: University of Connecticut
Author-Workplace-Homepage: http://www.uconn.edu/
Author-Name: Donghun Kim
Author-Name-First: Donghun
Author-Name-Last: Kim
Author-Workplace-Name: International University of Japan
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Title: Market Structure, Cost Pass-Through and Welfare with Differentiated Products
Abstract: In this paper, we estimate a mixed logit model for the U.S. processed cheese market and implement cost pass-through simulations and related consumer welfare analysis under different regimes of competition. In the model, the curvature of demand is determined to a significant extent by the empirical distribution of consumers. This property reduces the prediction errors of cost pass-through caused by an erroneous assumption as to the functional form of demand. We find that, under collusion, the pass-through rates for all brands fall between 23% and 37% and under Nash price competition, the range of pass-through is 67% ~ 98%.
Classification-JEL: D40, D60, L13, L66, H20
Length: 29 pages
Creation-Date: 2006-01
Number: EMS_2006_05
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2006_05.pdf
File-Format: Application/pdf
File-Function: First version, 2006
File-Size: 198KB
Keywords: Market Structure, Cost Pass-Through, Consumer Welfare, Mixed Logit
Handle: RePEc:iuj:wpaper:EMS_2006_05