Two-Sided Market Power in Firm-to-Firm Trade

Vanessa Alviarez, Michele Fioretti, Ken Kikkawa and Monica Morlacco

No 31253, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop and estimate a model of two-sided market power to study tariff pass-through in firm-to-firm trade. A tariff moves the negotiated price through two channels: the bilateral markup, set by bargaining, and the supplier’s marginal cost, which falls alongside quantities under decreasing returns. The same decreasing returns give concentrated buyers rents to bargain over, so prices fall with the buyer’s share of its supplier’s output. Using U.S. customs data, we estimate substantial importer bargaining power and steep export supply. Within continuing relationships, suppliers absorb about 30 percent of the 2018 tariffs, primarily through lower marginal costs as demand contracts.

JEL-codes: F12 L14 (search for similar items in EconPapers)
Date: 2023-05
New Economics Papers: this item is included in nep-com, nep-ind and nep-int
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Two-Sided Market Power in Firm-to-Firm Trade (2026)
Working Paper: Two-Sided Market Power in Firm-to-Firm Trade (2026)
Working Paper: Two-sided market power in firm-to-firm trade (2025)
Working Paper: Two-Sided Market Power in Firm-to-Firm Trade (2023)
Working Paper: Two-Sided Market Power in Firm-to-Firm Trade (2022)
Working Paper: Two-Sided Market Power in Firm-to-Firm Trade (2022)
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