MacKay, Alexander; Miller, Nathan H.; Remer, Marc; … - In: Economics Letters 123 (2014) 2, pp. 200-202
We show that, in general, consistent estimates of cost pass-through are not obtained from reduced-form regressions of price on cost. We derive a formal approximation for the bias that arises even under standard orthogonality conditions. We provide guidance on the conditions under which bias may...
