Impact of supply risk on cost pass-through
Document Type
Article
Publication Date
2025
Department/School
Marketing
Publication Title
Applied Economics Letters
Abstract
We study the cost pass-through rate in a supply chain setting where a buying firm sources from either a single unreliable supplier or dual unreliable suppliers. Numerous papers studying cost pass-through rates have assumed that supply is always certain and ample, which is not usually the case in practice. We find that the cost pass-through rate should depend on the supply uncertainty, its risk-sharing levels with upstream suppliers, and different sourcing strategies. In particular, the cost pass-through rate increases in supply risk-sharing levels, but decreases under single sourcing, compared to dual sourcing.
Link to Published Version
Recommended Citation
Bae, J., & Choi, J.-H. (Ryan). (2025). Impact of supply risk on cost pass-through. Applied Economics Letters, 32(16), 2349–2353. https://doi.org/10.1080/13504851.2024.2332585
Comments
J.-H. Choi is a faculty member in EMU's Department of Marketing.