A Primer on Pass-on

Frank P. Maier-Rigaud, IESEG School of Management (LEM-CNRS), Department of Economics and Quantitative Methods; NERA Economic Consulting, C.-Philipp Heller, NERA Economic Consulting and Slobodan Sudaric, NERA Economic Consulting offer A Primer on Pass-on.

ABSTRACT: The quantification of damage due to price overcharges necessarily involves the estimation of pass-on. This paper clarifies that pass-on is simply another way of describing the optimal reaction of firms to changes in their environment. It also addresses common misconceptions about a firms’ ability to pass-on changes in cost and the magnitude at which price adjustments take place both in an unregulated and in a regulated context.