Border prices and retail prices

Abstract

We analyze retail prices and at-the-dock (import) prices of speci…c items in the Bureau of Labor Statistics'(BLS) CPI and IPP databases, using both databases simultaneously to identify items that are identical in description at the dock and when sold at retail. This identi…cation allows us to measure the distribution wedge associated with bringing traded goods from the point of entry into the United States to their retail outlet. We …nd that overall U.S. distribution wedges are 50-70%, around 10 to 20 percentage points higher than that reported in the literature. We discuss the implications of this for measuring the size of the "pure" tradeables sector, exchange rate pass-through, and real exchange rate determination. We …nd that distribution wedges are very stable over time but there is considerable variation across items. There is some variation across the country of origin for the imported item, for our major trading partners, but not as much as the cross-item variation. We also investigate the determinants of distribution wedges, …nding that wedges do not vary systematically with exchange rates, but are related to other features of the micro data.

Goods-market frictions and international trade

“…The fact that import prices are lower than final sales prices, as given by equation 14, is consistent with the empirical findings of Berger et al (2012). This pricing approach, among other model features, is also similar to that of Drozd and Nosal (2012), who use a trade model with search frictions to account for several pricing puzzles of international macroeconomics.…”

“…The median of this distribution in the model for goods imported to the United States from Colombia is almost 10 percent. Berger et al (2012) find that aggregate wedges between U.S. retail prices and prices at the dock, which include ''both retail and distributor markups and local distribution and marketing costs,'' are around 50 to 70 percent. Since our model does not feature local distribution costs, it explains only about 20 percent of this aggregate wedge, but also suggests that about 80 percent of the aggregate wedge can be attributed to local distribution and marketing costs.…”

On What States Do Prices Depend? Answers From Ecuador

“…While their data set allows for a more disaggregated calculation of the distribution shares, it does not include services, which constitutes a large fraction of consumption expenditure. Consistent with equation (1) in the model section below, Burstein, Neves, and Rebelo (2003) and Berger et al (2012) found that the distribution shares are stable over time.…”

“…Instead of estimating the size of the distribution sector using aggregate data, Berger et al. (2012) measured the distribution shares using U.S. retail and import prices of specific items from the U.S. Consumer Price Index (CPI) and producer price index (PPI) data. They find that the distribution shares in these data are larger (on average) than the estimates reported for U.S. consumption goods using aggregate data.…”

A Welfare Ranking of Multilateral Reductions in Real and Tariff Trade Barriers when Firms are Heterogenous

“…Obviously, the two measures differ in their treatment of tariffs, and while imports are in the national accounts reported at border values, the latter measure using retail or market prices might be closer to political economy objectives concerned with the market shares of foreign products. See also Berger et al () for an instructive empirical investigation into US border prices versus retail prices.…”