Working Papers

I investigate the distributional consequences of tariffs, with a focus on the heterogeneity of pass-through and variety-loss. Using product level data from Pennsylvania during the United States’ 25% tariffs on single malt Scotch from 2019 to 2021, I find that an overall 10% price increase masks heterogeneity of a 15% price increase for low-quality products and 2% for high-quality products. On the variety side, a 21% overall decrease in product availability is driven by a 30% decrease for higher-quality products but no significant change for lower-quality products. Examining the

demand curvature for products show that the heterogeneity in price-increases can be explained by markup adjustments due to consumer substitution patterns. Welfare estimates from a discrete choice demand model that allows for flexible substitution patterns and heterogeneous consumers suggest that, compared to a baseline scenario of uniform tariff-effects, tariffs have a more regressive effect once accounting for the 

heterogeneous effects. This study contributes to the understanding of the distributional impact of tariffs, highlighting the importance of considering the heterogeneity in both the tariff impacts and in consumers

Work in Progress

Whether prices are strategic complements or substitutes between firms has important implications for taxes, exchange rates, inflation, and other forms of cost shocks. The mechanisms for these strategic price effects also depends on the substitutability of the products and the heterogeneity across consumers. In a differentiated products industry, I find that industry wide cost shocks lead to 10-20% higher pass-through than firm specific cost shocks, suggesting that strategic complementarities may play an important role in determining pass-through and incidence of taxes.