One name-brand cereal manufacturer is about to reduce wholesale prices for its cereals by 20 percent because consumers have been switching from its cereals to cheaper store brands. The success of this strategy relies on the assumption that supermarkets will pass on all of the savings by lowering the prices they charge consumers for the manufacturer' s cereals. Although supermarkets usually pass on such savings, in this case it is likely that supermarkets not do so because__.


The wholesale price of Kellogg's Corn Flakes will be reduced by 10 percent next month, and several other name-brand cereal manufacturers are about to reduce the wholesale prices of their cereals.