The effect of international trade on markups distribution

Authors

  • Diego Rodriguez Universidad Complutense de Madrid
  • Lourdes Moreno Universidad Complutense de Madrid

DOI:

https://doi.org/10.17811/ebl.2.1.2013.33-41

Abstract

This paper presents empirical evidence about the relationship between market openness and markup distribution of manufacturing firms. The results point out that tougher competition associated to openness reduces marginal costs and prices, while it increases the average firm size. However, the evidence about the effect on average markups and the dispersion of performance variables across industries is weaker. These results partially support the theoretical predictions by Melitz and Ottaviano (2008)

References

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Bellone, F., Musso, P., Nesta, L. and Warzynski, F. (2012) Productivity, trade and endogenous mark-ups: testing some micro-level implications of the Melitz-Ottaviano model, mimeo.

Chen, N., Imbs, J. and Scott, A. (2009) The dynamics of trade and competition, Journal of International Economics, 77(1), 50-62.

De Loecker, J. and Warzynski, F. (2012) Markups and firm-level export status, American Economic Review, 102(6), 2437-2471.

Feenstra, R. and Weinstein, D. (2010) Globalization, markups and the U.S. price level, Working Paper 15479, NBER.

Melitz, M.J. (2003) The impact of trade on intra-industry reallocations and aggregate industry productivity, Econometrica, 71(6), 1695-1725.

Melitz, M. J. and Ottaviano, G.I.P. (2008) Market size, trade and productivity, The Review of Economic Studies, 75, 295-316.

Moreno, L. and Rodríguez, D. (2010) Export activity, persistence and mark-ups, Applied Economics, 42, 475-488.

Ottaviano, G.I.P., Tabuchi, T. and Thisse, J.F. (2002) Agglomeration and trade revisited, International Economic Review, 43, 409-436.

Roeger, W. (1995) Can imperfect competition explain the difference between primal and dual productivity measures? Estimates for U.S. Manufacturing”, Journal of Political Economy, 103(2), 316-330.

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Published

21-02-2013

How to Cite

Rodriguez, D., & Moreno, L. (2013). The effect of international trade on markups distribution. Economics and Business Letters, 2(1), 33–41. https://doi.org/10.17811/ebl.2.1.2013.33-41

Issue

Vol. 2 No. 1 (2013): March

Section

Articles

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