PRICE TRANSMISSION, MARKET POWER ANDRETURNS TO SCALE: A NOTE

In this paper, we aim to model the vertical relation between retailers and suppliersin the food industry whereby retailers exercise seller power in their relation with consumersand buyer power in their relation with producers. We then evaluate the degree of pricetransmission, relative to the perfectly competitive benchmark, from the farm to the retailsector assuming a supply shock. With the view to evaluating the impact of market power'sinteraction with industry technology on the degree of price transmission, we assume industrytechnology to be characterized by variable input proportions and non-constant returns toscale...