Tariff Pass-through in Wholesaling: Evidence from Firm-level Data in Japan✰

Abstract

Tariff pass-through is a vital issue for considering who and to what extent the trade liberalization benefits. This paper empirically examines the tariff pass-through in wholesaling by employing the wholesale firm-level data in Japan. We found that importing wholesalers significantly raised their margin ratio (i.e., (sales -procurements) / sales) against tariff reduction. On average, a 1% reduction of tariffs raised the margin ratio by around 0.25 percentage point. This rise is equivalent to the rise of sales prices to procurement prices by around 0.34%. For comparison purposes, we also analyzed tariff pass-through for the import and consumer prices and found that a 1% reduction of tariffs raised import prices (export prices for exporters) by 0.49% and decreased consumer prices by 0.08%. In sum, wholesalers in importing country enjoy the smaller part of tariff rent than producers in exporting country but the larger part than consumers in importing country.

Heterogeneous impact of import competition on firm organisation: Evidence from Japanese firm‐level data

“…HS nine‐digit import data over the period 1997–2014 are reconciled using Ito and Aoyagi’s (2019) concordance table. The concorded HS nine‐digit import data are then matched with the six‐digit COM product code using the concordance table developed by Baek et al (2021). Data on product‐level exports to other high‐income countries are obtained from the CEPII BACI database.…”

“…The concordance table between COM's six-digit commodity data and HS nine-digit trade data was developed and provided by Baek et al (2021).…”

Adjusting to China competition: Evidence from Japanese plant‐product‐level data

“…Then, the concordant HS 9-digit import data are matched with the product codes in the COM, which is at the 6-digit. This matching is done by using the concordance table between the COM 6-digit commodity data and HS 9-digit trade data constructed in Baek et al (2019). 10 In our matched dataset, 1125 products are included, while in the original dataset in the COM, there are 2378 products as of the year 2014.…”