Please join the Department of Food, Agricultural and Resource for the "Firm-level Pass-through of Supply Chain Disruptions: Insights from the US Beef Market∗" Seminar presented by Dr. Meilin Ma, Associate Professor in the Department of Agricultural Economics at Purdue University.

Abstract

We leverage a fire outbreak that caused a large but temporary capacity loss at the largest US beef packer to study how firm conduct shapes the pass-through of supply disruptions along the supply chain. Despite evidence of industry-wide increases in processing costs, retail prices for the affected packer’s products fell. To rationalize this pattern, we develop a model of bilateral retailer-packer bargaining that accounts for reliability of product delivery. The model highlights how disruptions alter bargaining leverage and shift margins between buyer and seller. Counterfactual simulations demonstrate that the sign and magnitude of pass-through are highly sensitive to the magnitude of capacity loss and perceived reliability.