[massysett]

No, in a competitive market they are not necessarily “passing that cost on.” For instance, an online retailer must compete with bricks-and-mortar stores. At local stores, all shipping and returns are free. If online retailer’s price is too high, it might simply lose the sale. Its price, including shipping, must compete with the price at the store.

I hear this “passing the cost on” argument all the time and it always presumes that the consumer is the only cost taker. It forgets that costs can also get passed to someone else: the shareholders, in the form of lower profits.