Tariff Pass-Through and Welfare in the Tablet Computer Market

45 Pages Posted: 25 Jun 2019 Last revised: 25 Sep 2019

See all articles by R. Scott Hiller

R. Scott Hiller

Fairfield University - Department of Economics

Scott Savage

University of Colorado at Boulder

Date Written: September 23, 2019

Abstract

This paper estimates the short-run effects of tariffs on United States tablet computer prices and welfare. Market-level data are used to estimate a model of demand, supply and trade policy and to simulate equilibria prices and sales in scenarios with tariffs on Chinese production. A 25 percent tariff on firms assembling in China results in a tariff elasticity of consumer prices of 1.108, a 29.6 percent decline in profits for firms assembling in China, and a deadweight loss of 28.8 percent of total economic surplus. Firms assembling elsewhere benefit from the reduction in rival’s competitiveness by increasing their prices, market shares and profits. A long-run implication is that firms may be incented to shift production from “uncompetitive” facilities in China to lower-cost countries that are politically favored by the United States.

Keywords: differentiated goods, pass-through, tablet computers, tariffs

JEL Classification: D4, F13, L63

Suggested Citation

Hiller, R. Scott and Savage, Scott, Tariff Pass-Through and Welfare in the Tablet Computer Market (September 23, 2019). Available at SSRN: https://ssrn.com/abstract=3407621 or http://dx.doi.org/10.2139/ssrn.3407621

R. Scott Hiller (Contact Author)

Fairfield University - Department of Economics ( email )

Fairfield, CT 06824
United States

Scott Savage

University of Colorado at Boulder

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
98
Abstract Views
845
Rank
506,325
PlumX Metrics