Trade elasticities, heterogeneity, and optimal tariffs

Soderbery, Anson

doi:10.1016/j.jinteco.2018.04.008

Cited by 46 publications

(89 citation statements)

References 23 publications

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“…For the EU, we use Germany as the US's biggest trading-partner's estimated elasticities fromSoderbery (2018). The results qualitatively similar if we use other EU countries as reference.…”

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confidence: 71%

Tariffs and Politics: Evidence from Trump's Trade Wars

Fetzer

Schwarz

2019

SSRN Journal

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We use the recent trade escalation between the US, China, the European Union (EU), Canada and Mexico to study whether retaliatory tariffs are politically targeted. Using aggregate and individual-level data we find evidence that the retaliatory tariffs disproportionally targeted areas that swung to Trump in 2016, but not to other Republican candidates. We propose a novel simulation approach to construct counterfactual retaliation responses. This allows us to both quantify the extent of political targeting and assess the general feasibility. Further, the counterfactual retaliation responses allow us to shed light on the potential trade-offs between achieving a high degree of political targeting and managing the risks to ones own economy. China, while being constrained in its retaliation design, appears to put large weight on achieving maximal political targeting. The EU seems successful in maximizing the degree of political targeting, while at the same time minimizing the potential damage to its own economy and consumers.

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“…For the EU, we use Germany as the US's biggest trading-partner's estimated elasticities fromSoderbery (2018). The results qualitatively similar if we use other EU countries as reference.…”

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confidence: 71%

Tariffs and Politics: Evidence from Trump's Trade Wars

Fetzer

Schwarz

2019

SSRN Journal

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“…Note that the corresponding median gures are much lower, at respectively 2.7 and 3.1 Soderbery (2018). obtains a mean elasticity of 3.4 for 1,243 HS4 product categories over the1991-2007 period.…”

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confidence: 86%

“…The trade elasticity can be estimated via a demand system (Feenstra 1994, Ossa 2015, Soderbery 2018, using the non-arbitrage condition and product-level price data (Simonovska & Waugh 2014a, Giri, Yi & Yilmazkuday 2020, considering imports as inputs into the GDP function (Kee, Nicita & Olarreaga 2008) or in a gravity framework (Caliendo & Parro 2015).…”

Section: Introductionmentioning

confidence: 99%

Product-Level Trade Elasticities

2019

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Trade elasticity is a crucial parameter in evaluating the welfare impacts of trade liberalization. We estimate trade elasticities at the product level (6-digit of the Harmonized System) by exploiting the variation in bilateral applied tariffs for each product category. The obtained trade elasticities are centered around-5. We show that using homogeneous-instead of product-specific-trade elasticity implies a downward bias in welfare gains from trade in particular for developing countries.

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“…Cosar and Demir (2016) highlighted that internal transportation infrastructure matters for trade policies. Likewise, Soderbery (2018) argued that the optimal tariffs vary in accordance to heterogeneous supply elasticities. Acharya (2018) revealed that lobbying has significant effects on trade policy, resulting in government preference for import tariffs over export subsidies.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Trade Policies Under Product Differentiations

Yang

Nie

2020

Journal of Business Economics and Management

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This article focuses on the optimal international trade policy considered product differentiations. A duopoly model with a home firm in a developing country and a foreign firm in a developed country is established. The findings indicate that, the optimal tariff relies on the product differentiations significantly. On one hand, higher marginal cost of home firms have opposite effects on optimal tariff compared to higher marginal cost of foreign firms. On the other hand, the optimal tariff is monotonically decreasing in the amount of consumers caring about brands and increasing in the scale of consumers not caring about brands. Moreover, an increase in the marginal cost and transportation cost of imported goods triggers price rising in domestic market as the market power of home firms is consolidated. In addition, a foreign firm may withdraw from domestic market if its competitive advantages vanishes under high tariffs.

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Trade elasticities, heterogeneity, and optimal tariffs

Cited by 46 publications

References 23 publications

Tariffs and Politics: Evidence from Trump's Trade Wars

Tariffs and Politics: Evidence from Trump's Trade Wars

Product-Level Trade Elasticities

Optimal Trade Policies Under Product Differentiations

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