Kiel Working Papers, Kiel Institute for World Economics
No 1556:
Imports, Pass-Through, and the Structure of Retail Markets
Horst Raff and Nicolas Schmitt
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, firmheterogeneity; (follow links to similar papers)
JEL-Codes: F12,; L11; (follow links to similar papers)
35 pages, September 2009
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