Pass-through Analysis of Cotton Prices and the Cotton Supply Chain

A common question when analyzing supply chains is how much a change in input costs at one link in the supply chain affect prices further downstream.  To address this question, research has been conducted that examines the extent that changes in prices are “passed-through.”  Much of the pass-through research that has been conducted has been focused on changes in prices at the beginning of supply chains - at the commodity-level. To date, however, there is no known research analyzing the effect of changes of cotton fiber prices on cotton goods, neither at different stages in the cotton supply chain nor at the retail level. The purpose of this paper is to develop a greater understanding of relationships throughout the cotton supply chain and to inform interested parties to the extent that changes in cotton prices do influence changes in yarn, fabric, and apparel prices.