FIND Seminar: Mi Dai, Beijing Normal University

Title: Quality and The Unequal Gains from Tariff Liberalization

2021.05.12 | Anne Lisberg Lundby

Date Tue 25 May
Time 10:30 12:00
Location Online via Zoom

Presenter: Mi Dai, Beijing Normal University

Title: Quality and The Unequal Gains from Tariff Liberalization

We examine the distributional effects of trade liberalization through the expenditure channel, combining data on automobile prices, sales, and attributes in China. On May 2018, China lowered its automobile tariffs from 25% to 15%. We estimate the tariff pass-through into the prices of imported and domestic cars, and investigate how tariff pass-through varies with quality. Combined with information of car sales, we evaluate the effect of this tariff cut on consumer welfare across cities with different income. We find that imported cars are of higher quality than domestic cars, and are purchased more in cities with higher income. Tariff pass-through into the price of imported car is 47%, and the pass-through rate increases with quality. The tariff cut increased consumer welfare by $5 billion, and the gain is larger in richer cities.

Host: Rui (Ray) Zhang

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