Focal pricing constraints and pass-through of input cost change

Pass-through rates are relevant in a variety of contexts, such as estimating antitrust damages. It is often asserted that focal pricing, the practice of charging only special prices, e.g. ending in 9s, reduces the degree of pass-through in an industry. This claim has had serious consequences; for example, it has contributed to the dismissal of high-profile antitrust cases. However, it is not grounded in economic theory or evidence. I prove that, in a simple but general framework, expected pass-through is unchanged by the presence of focal pricing constraints. Therefore, the fact that an industry is characterised by focal pricing constraints does not entail that it will also be characterised by a low pass-through rate.