doc__table__116

| (52) | Firstly, the nature of the input costs subject to an overcharge affects whether and to what extent this overcharge can be passed on. When the overcharge impacts the direct purchaser's costs which do not vary according to the input quantity (i.e. fixed costs), it is less likely to be passed on because such costs typically do not affect the direct purchaser's price setting, at least not in the short run. However, in the long run, fixed costs may affect a firm's strategic decision analysis, too, e.g. the production capacity, which, in turn, might impact the subsequent (short run) price formation mechanism. In such a scenario, fixed costs may also be passed on. By contrast, when the overcharge impacts the direct purchaser's costs which actually vary according to the input quantity (i.e. variable costs), it will generally be more likely to be passed on, at least to some extent. This is because marginal costs (a subcategory of variable costs that can be defined as the cost increment incurred when purchasing one additional input) (56) typically affect the direct purchaser's price-setting decisions (57).

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Source: EUR-Lex (Cellar) · retrieved 2026-09-25 · Text as adopted (Official Journal); later amendments are not incorporated in this text.