TARIFF RATE PASS-THROUGH: BUYER POWER AND PRODUCT DIFFERENTIATION EFFECTS | Journal of Economics ..

The economic actor who pays the tax is not always the same as the economic actor who carries the tax burden, according to economic theory. Tariffs, like every other levy, raise domestic prices. The question is whether tariffs are completely passed on to domestic prices or whether international producers will shoulder some of the burden. This research examines how tariff rate passthroughs change as a result of product differentiation and buyer demand concentration.The research looks at a few industrial industries from 1996 to 2015, when tariff rates were on the decline. In more differentiated domestic commodity markets, we find that tariffs only partially flow through to import rates. As buyer market saturation rises, we also find that tariffs only partially pass through in more concentrated product markets, but that tariffs would fully pass through in more commodity-oriented product markets.

Please see the link - https://ikprress.org/index.php/JET/article/view/6066