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GLD 413.19+1.1%Jan 6 4:00 PM EST

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To: Pogeu Mahone who wrote (161086)8/9/2020 2:46:15 PM
From: Julius Wong   of 219058
 
Effects of the 2018 Tariffs on Washing Machines

Three economists, Aaron Flaanen (Federal Reserve Board), Ali Hortaçsu (University of Chicago), and Felix Tintelnot (University of Chicago) just published a working paper on the effects of these tariffs: “The Production Relocation and Price Effects of U.S. Trade Policy: The Case of Washing Machines.” Their econometric results are not unexpected, but with a twist:

We find that in response to the 2018 tariffs … , the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount.

Instead of increasing washer prices by 25%, domestic manufacturers apparently increased them by 12%, and hid another 12% increase on a good of roughly the same price that is usually bought along with a new washer. Why competition did not prevent this differential pricing is unexplained; perhaps there is little competition among the three producers of this industry, especially given the tariff protection?

econlib.org
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