Assessing the effects of tariff reform on U.S. food manufacturing industries: the role of imperfect competition and intermediate inputs
Recent work indicates that the joint effects of intermediate input and final output tariff reforms on equilibrium in the differentiated final products sector are analytically ambiguous. This issue is addressed empirically for disaggregate, imperfectly competitive U.S. food manufacturing industries. The input tariff effect dominates in most industries, leading to increases in the number of U.S. firms and total industry output as a result of tariff reform. This provides evidence that the existing U.S. tariff profile discriminates against domestic food manufacturers, as input tariff effects outweigh the protection offered by output tariffs. This conclusion is robust to changes in the degree of interfirm rivalry (monopolistic competition or cournot oligopoly).
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