sharat ganapati

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Working Papers

Non-Tariff Barriers and Bargaining in Generic Pharmaceuticals - November 2018
Pharmaceutical prices are widely dispersed across countries with comparable quality standards. We study two elements of this dispersion; non-tariff barriers and buyer bargaining power. Under monopoly, generic drug prices are 3-4 times higher in the United States. With 5 or more competitors, generic drugs prices are similar across countries. Motivated by this, we use a structural model to examine two policy solutions to reduce drug prices. First, we remove non-tariff barriers to increase the number of competitors through a reciprocal approval arrangement. Second, we explore the US government's unexploited purchasing power to negotiate drug prices. Regarding Medicaid, results show that the first measure can reduce total expenditures by 8% and the second by 18%. Both procedures done in tandem would achieve aggregate savings of 19%.
The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies - August 2018
Nearly half of all transactions in the $6 trillion market for manufactured goods in the United States were intermediated by wholesalers in 2012, up from 32 percent in 1992. Seventy percent of this increase is due to the growth of “superstar” firms - the largest one percent of wholesalers. This growth was driven by an intuitive linkage between their sourcing of goods from abroad and an expansion of their domestic distribution network to reach more buyers. Both elements require scale economies and lead to increased wholesaler market shares and markups. Counterfactual analysis shows that despite increases in wholesaler market power, intermediated international trade has two benefits for buyers: directly through buyers' valuation of globally sourced products, and indirectly through the passed-through benefits of wholesaler economies of scale and increased quality.
Oligopolies, Prices, Output, and Productivity - Feb 2018
Previously titled "Oligopolies, Prices, and Quantities: Has Industry Concentration Increased Price and Restricted Output?"
American industries have grown more concentrated over the last forty years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. Using public data from 1972-2012, I use price data to disentangle revenue from output. Difference-in-difference estimates show that industry concentration growth is positively correlated to productivity and real output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor's revenue share. Productive industries (with growing oligopolists) expand real output and hold down prices, raising consumer welfare, while maintaining or reducing their workforces, lowering labor's share of output.
The Incidence of Carbon Taxes in U.S. Manufacturing: Lessons from Energy Cost Pass-Through - March 2018
(NBER Working Paper 22281)
This paper studies how increases in energy input costs for production are split between consumers and producers via changes in product prices (i.e., pass-through). We show that in markets characterized by imperfect competition, marginal cost pass-through, a demand elasticity, and a price-cost markup are sufficient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We find that increases in energy prices lead to higher plant-level marginal costs and output prices but lower markups.
The Extensive Margin of Exporting Products: A Firm-level Analysis - Jan 2016 -
(AEJ: Macroeconomics - Revise and Resubmit)
We develop a general equilibrium model of multi-product firms in international trade to quantify market access costs at the level of firms, their products, and their export destinations. We estimate this framework with a simulated method of moments under rich demand and access cost shocks, using Brazilian firm-product export data. Our estimates quantify the relevance of market access costs and reveal large economies of scope that differ across export destinations. We evaluate a scenario where market access costs for an additional product are reduced to the level of those in nearby countries, generating welfare gains similar to eliminating current tariffs.
Connecting Production and Distribution: Linking Manufacturing and Wholesaling Data - October 2016
The wholesale industry facilitates the trade of over 50% of domestic manufactured goods. However due to data limitations, there has been little research in the linkage between the manufacturing and wholesale trade sectors. I develop an algorithm to link North American Industry Classification System (NAICS) codes for manufactured goods with the NAICS wholesale sectors that trade these goods.

Current Research Projects:

Market Power, Prices, and Productivity with Colin Hottman
Path Dependence and Suboptimal Market Positioning: Automotive Dealership Networks
Intermediates and Vertical Integration in International Trade

Inactive Working Papers:

Minimum Wage and Retail Price Pass-through: Evidence and Estimates from Consumption Data - October 2016
Utilizing detailed transaction-level datasets, we find minimal pass-through of minimum wage changes onto retail and grocery prices. Estimates from other industries suggest that, aside from the restaurant and fast-food sectors, this low pass-through holds more generally.
An Investigation Into Executive Compensation and Corporate Board Ties - May 2009