Imports, Pass-Through, and the Structure of Retail Markets

39 Pages Posted: 8 Dec 2009

See all articles by Horst Raff

Horst Raff

Christian-Albrechts-Universitaet zu Kiel; CESifo (Center for Economic Studies and Ifo Institute)

Nicolas Schmitt

CESifo (Center for Economic Studies and Ifo Institute); Simon Fraser University

Date Written: October 2009

Abstract

We construct a model of trade with heterogeneous retailers to examine the effects of trade liberalization on retail market structure, imports and social welfare. We are especially interested in studying the degree of pass-through of import into retail prices and the effects of retail market regulation. The paper shows that the degree of pass-through may be large when market structure effects are taken into account, and that restrictions on retailing may have significant effects on imports and the degree of pass-through. The paper helps explain the apparent discrepancy between the low observed degree of pass-through and the large benefit that consumers seem to derive from trade liberalization.

Keywords: international trade, retailing, pass-through, firm heterogeneity

JEL Classification: F12, L11

Suggested Citation

Raff, Horst and Schmitt, Nicolas and Schmitt, Nicolas, Imports, Pass-Through, and the Structure of Retail Markets (October 2009). CESifo Working Paper Series No. 2817, Available at SSRN: https://ssrn.com/abstract=1488009 or http://dx.doi.org/10.2139/ssrn.1488009

Horst Raff

Christian-Albrechts-Universitaet zu Kiel ( email )

Institut fur Volkswirtschaftslehre
Wilhelm-Seelig-Platz 1
Kiel, 24098
Germany
+49-431-880-1582 (Phone)
+49-431-880-3150 (Fax)

HOME PAGE: http://www.wiso.uni-kiel.de/vwlinstitute/Raff/?page=raff

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Nicolas Schmitt (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Simon Fraser University ( email )

Department of Economics
8888 University Drive
Burnaby, BC V5A 1S6
Canada
604 291 4582 (Phone)

HOME PAGE: http://www.sfu.ca/~schmitt/

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