My research focuses on the effect of firms' strategic behavior and market power on international trade.
The Market Power of Buyers and Sellers in International Trade R&R at American Economic Journal: Microeconomics
Price dispersion across buyers within product categories is commonly explained by quality differences in international trade. I use a uniquely fine-grained trade dataset which includes seller names and product descriptions to decompose price dispersion while accounting for quality. Surprisingly, I find substantial residual price variation across buyers of nearly identical products from the same seller. I show these price residuals are strongly negatively correlated with buyer size, which explains 25% of price dispersion across buyers. This is not driven by scale economies or intra-firm trade and suggests market-power mechanisms. To rationalize this finding, I integrate basic industrial organization models into an international trade framework. I show classic oligopolistic price discrimination and oligopsony both imply a positive buyer size - price relationship and cannot explain my findings. However, the data is consistent with price discrimination if larger buyers have outside options that allow them to demand discounts from their suppliers. This has three implications. First, by countervailing the market power of sellers, larger buyers can increase pass-through of global shocks along value chains. Second, countervailing power upstream gives further advantage to initially more productive firms downstream thus increasing firm heterogeneity. Third, larger buyers gain more from output trade liberalization through additional input price reductions.
Making America Great Again? The Economic Impacts of the Liberation Day Tariffs (with Ahmad Lashkaripour, Luca Macedoni, and Ina Simonovska)
On April 2, 2025, President Trump announced "Liberation Day," imposing broad tariffs on imports to reduce trade deficits and revive U.S. industry. We analyze the long-term economic effects of these tariffs, finding that while they may improve U.S.'s terms of trade if trading partners do not retaliate, any welfare gains vanish under reciprocal retaliation. Assuming no retaliation, we derive the optimal U.S. tariff rate, which is approximately 25% and uniformly applied across all trade partners. This optimal structure stands in stark contrast to the USTR's proposed tariff schedule, which varies by trading partner and is based on bilateral trade deficits. When trading partners retaliate optimally against the USTR-proposed tariffs, the U.S. experiences a welfare loss of nearly 1%, while partner countries offset virtually all the initial losses. The resulting tariff war, however, reduces global employment by 0.5%. Although the tariffs do succeed in reducing the U.S. trade deficit, the resulting deadweight losses underscore the inefficiency of using protectionist trade policy as a tool for deficit reduction.
Frequency of Shipment and Gains from Trade (with Konstantin Kucheryavyy and Ruo Shangguan)
We extend the Melitz (2003) heterogeneous firms trade model by introducing variable marginal costs of exporting. Our model allows marginal export costs to depend flexibly on shipment quantity, beyond traditional iceberg trade costs. We provide microfoundations for these costs using a firm's inventory management problem. Assuming Pareto-distributed firm productivities, our model generates a gravity equation and a welfare gains formula that generalizes the Arkolakis et al. (2012) formula. The key parameter in our welfare formula can be estimated using exporters' shipment frequency. Using Colombian firm-to-firm customs data, we estimate this parameter and calibrate all trade costs. Our findings reveal that while the ad-valorem equivalent rate of exporting costs is minimal for highly productive firms, it becomes substantial for less productive ones.
The Effect of Competition on Prices in Firm-to-Firm Trade: Evidence from the Russian Food Embargo (Preliminary slides)
Intermediaries and Long-Term Contracts in Maritime Transportation (with Haiying Jia, Francois-Charles Wolff, and Pierre Cariou)
Competition, Consumer Biases, and Firm Pricing Strategies (with Sam Hirshman and Alina Ozhegova)
Global Value Chains: What are the Benefits, and Why Do Countries Participate? (with Faezeh Raei and Borislava Mircheva) IMF Working Papers, 19/18, 2019