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| (125) | As explained in Annex 1, there are also good reasons why firms may not always pass on small changes in their marginal costs, at least not in the short run, even if they would pass on larger cost changes. Hence, it may not be legitimate to assume that the passing-on rate will be similar for different changes in the input cost. One explanation may be that the firm may incur so-called price adjustment costs, and thus prefer waiting until marginal cost increases accumulate beyond a certain threshold before changing its prices.

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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.