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We demonstrate that cost pass-through can be used to inform demand calibration, potentially eliminating the need for data on margins, diversion, or both. We derive the relationship between cost pass-through and consumer demand using a general oligopoly model of Nash-Bertrand competition and...
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-in-place are reduced. We find that changes in SG&A costs separate between the two cost drivers, and that the explanatory power of … of the single-driver cost behavior model. Similar insights are obtained when we replace SG&A costs with employee … headcount or employee costs as the cost measure of interest. In all cases, we find that the cost inertia term is significantly …
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