Focal pricing constraints and pass-through of input cost changes

Pass-through rates are relevant in a variety of contexts, such as estimating antitrust damages. It is often alleged 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 serious consequences, including the dismissal of court cases, but 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. It is therefore not safe to assume that pass-through will be low in industries characterised by focal pricing constraints.