Farm406

13 farm406 consumers typically benefit because the competition leads to lower prices. However, in many smaller, rural communities, there may be only one or very few retailers. In this case, these retailers have the ability to pass through a greater percentage of their cost increases to consumers in the form of higher prices. In the most extreme cases when a retailer is essentially a monopolist within a community (e.g., a similar retailer in another location is so far away that it may be too costly to drive there, especially in the case of smaller items such as shampoos or spark plugs), the retailer can pass through 50% or more of the cost increase. (It is important to acknowledge the caveat that long-run reputation and good-will effects exist, and retailers in smaller communities may limit the extent to which they pass through their costs, even if these businesses have substantial market power.) Lastly, the extent to which these price increases are "felt" by consumers also depends on their income and the proportion of their income that is spent on everyday items for their household and business. For example, the USDA Economic Research Service noted that rural household income is approximately 20–25% less than in urban areas. This implies that even a small increase in prices is likely to have a relatively greater economic effect on a household in a rural community. And unlike the policies implemented to counteract economic losses from retaliatory tariffs on specific agricultural commodities, it will be much more difficult to isolate the impacts of trade constraints on final consumer goods and even harder (likely impossible) to equitably compensate consumers.

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