sharat ganapati's research

Data Research Teaching CV

Published and Accepted Papers

Energy Cost Pass-Through in U.S. Manufacturing: Estimates and Implications for Carbon Taxes
American Economic Journal: Applied Economics 12, no. 2 (2020): 303-42.
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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.
Growing Oligopolies, Prices, Output, and Productivity
American Economic Journal: Microeconomics 13, no. 3 (2021): 309-27.
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Previously titled "Oligopolies, Prices, and Quantities: Has Industry Concentration Increased Price and Restricted Output?"
American industries have grown more concentrated over the last 40 years. In the absence of productivity innovation, this should lead to price hikes and output reductions, decreasing consumer welfare. With US census data from 1972 to 2012, I use price data to disentangle revenue from output. Industry-level estimates show that concentration increases are positively correlated to productivity and real output growth, uncorrelated with price changes and overall payroll, and negatively correlated with labor’s revenue share. I rationalize these results in a simple model of competition. 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 Extensive Margin of Exporting Products: A Firm-level Analysis
American Economic Journal: Macroeconomics 13, no. 4 (2021): 182-245.
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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.
Markups and Fixed Costs in Generic and Off-Patent Pharmaceutical Markets - August 2021
Conditionally Accepted at The Review of Economics and Statistics
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Pharmaceutical prices are widely dispersed across countries with comparable quality standards. Un- der monopoly, off-patent and generic drug prices are at least four times higher in the United States than comparable English-speaking high income countries. With five or more competitors, off-patent drug prices are similar or lower. Our analysis shows that differential US markups are largely driven by generic supplier market power and not wholesale intermediaries or pharmacies. Furthermore, we show that the traditional mechanism of reducing market power, free entry, is limited as implied entry costs are substantially higher in the US.

Working Papers

The Modern Wholesaler: Global Sourcing, Domestic Distribution, and Scale Economies - Updated May 2020
Revise and Resubmit: American Economic Journal: Microeconomics
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Abstract 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. Estimates based on detailed administrative data show that the rise of the largest firms 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 and markups, scale has benefits for buyers: through globally sourced varieties, nation-wide distribution networks, lowered marginal costs, and increased quality.
The Geography of Remote Work - August 2021
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We show that cities with higher population density specialize in high-skill service jobs that can be done remotely. The urban and industry bias of remote work potential shaped the recent pandemic’s economic impact. Many high-skill service workers started to work remotely, withdrawing spending from big-city consumer service industries dependent on their demand. As a result, low-skill service workers in big cities bore most of the recent pandemic's economic impact. Our findings have broader implications for the distributional consequences of the U.S. economy’s transition to more remote work.
Skilled Scalable Services: The New Urban Bias in Economic Growth - November 2020
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Since 1980, economic growth in the U.S. has been fastest in its largest cities. We show that a group of skill- and information-intensive service industries are responsible for all of this new urban bias in recent growth. We then propose a simple explanation centered around the interaction of three factors: the disproportionate reliance of these services on information and communication technology (ICT), the precipitous price decline for ICT capital since 1980, and the preexisting comparative advantage of cities in skilled services. Quantitatively, our mechanism accounts for most of the urban biased growth of the U.S. economy in recent decades.
Is Tourism Good for Locals? Evidence from Barcelona - July 2020
Aggregate Implications of Firm Heterogeneity: A Nonparametric Analysis of Monopolistic Competition Trade Models - November 2020
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We measure the role of firm heterogeneity in counterfactual predictions of monopolistic competition trade models without parametric restrictions on the distribution of firm fundamentals. We show that two bilateral elasticity functions are sufficient to nonparametrically compute the counterfactual aggregate impact of trade shocks, and recover changes in economic fundamentals from observed data. These functions are identified from two semiparametric gravity equations governing the impact of bilateral trade costs on the extensive and intensive margins of firm-level exports. Applying our methodology, we estimate elasticity functions that imply an impact of trade costs on trade flows that falls when more firms serve a market because of smaller extensive margin responses. Compared to a baseline where elasticities are constant, firm heterogeneity amplifies both the gains from trade in countries with more exporter firms, and the welfare gains of European market integration in 2003-2012.
Entrepôt: Hubs, Scale, and Trade Costs - July 2021
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Entrepˆots are hubs that facilitate trade between various origins and destinations. We study these entrepôts, the network they form, and their impact on international trade. We document novel facts about the global trading network: the trade network is a hub-and-spoke system with 80% of trade shipped indirectly via these hubs using larger ships, suggesting that, by concentrating shipments, entrepôts reduce trade costs through scale economies. We estimate direct and indirect trade costs by building a model of endogenous entrepôt formation incorporating route choice by producers into a Ricardian setting and develop a geography-based instrument to estimate a leg-level scale elasticity. Simulating the counterfactual opening of the Arctic Passage and Brexit, we find that network spillovers—impacts on countries unaffected by direct changes—double baseline welfare gains, with scale economies in shipping further tripling them. Counterfactual infrastructure improvements show that entrepôts are globally pivotal nodes and concentrate network spillovers regionally.
Connecting Production and Distribution: Linking Manufacturing and Wholesaling Data - October 2016
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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
Monopoly on the High Seas with Woan Foong Wong

Inactive Working Papers:

Skilled Tradable Services: The Transformation of U.S. High-Skill Labor Markets - August 2019 (Subsumed by "Skilled Scalable Services")
Minimum Wage and Retail Price Pass-through: Evidence and Estimates from Consumption Data - October 2016
An Investigation Into Executive Compensation and Corporate Board Ties - May 2009