| By: |
Han, Jun (Nankai University);
Liu, Runjuan (University of Alberta, Alberta School of Business);
Ural Marchand, Beyza (University of Alberta, Department of Economics);
Zhang, Junsen (Chinese University of Hong Kong) |
| Abstract: |
This paper investigates the Chinese tariff pass-through mechanism. We estimate
how market structure, specifically the size of the private sector, affects the
transmission of prices from the border to consumers by using household survey
data from urban China. Our results suggest that changes in trade policy are
not perfectly transmitted to the consumers and imperfections in the local
market partially isolate households from the effects of trade policies.
Incorporating the price changes of tradable and nontradable goods, we
investigate how trade liberalization affects household welfare through changes
in the cost of consumption. Our results show that trade liberalization,
particularly China’s WTO accession, brings welfare gains to almost every
household across the per capita expenditure spectrum, and that the
distributional effect is strongly pro-poor. |
| Keywords: |
Market Structure; Trade Liberalization; Pass-Through; Welfare |
| JEL: |
D31 D40 F14 O12 |
| Date: |
2013–07–01 |
| URL: |
http://d.repec.org/n?u=RePEc:ris:albaec:2013_011&r=cna |