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 bears the tax burden, according to economic theory. Tariffs, like any other tax, raise domestic prices. The question is whether tariffs are fully passed on to domestic prices or if foreign producers would shoulder some of the burden. This study examines how tariff rate pass-throughs vary with product differentiation and buyer market concentration to shed insight on this topic. The research looks at a few manufacturing sectors from 1996 to 2015, when tariff rates were on the decline. In increasingly varied domestic product marketplaces, we find that tariffs only partially filter through to import prices. As buyer market concentration rises, we also find that tariffs will partially flow through in more concentrated product markets, but that tariffs will totally pass through in more commodity-oriented product markets.

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