for discussions on an earlier draft. We also thank three anonymous referees and the editor for comments and suggestions. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
In this paper, we develop a method to estimate markups using plant-level production data. Our approach relies on cost-minimizing producers and the existence of at least one variable input of production. The suggested empirical framework relies on the estimation of a production function and provides estimates of plant-level mark-ups without specifying how firms compete in the product market. We rely on our method to explore the relationship between markups and export behavior. We find that markups are estimated significantly higher when controlling for unobserved productivity; that exporters charge, on average, higher markups and that markups increase upon export entry. (JEL D22, D24, F14, L11, L60)
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Documents inIn addition, our results give support to the idea that opening to trade has a disciplining effect on firms' market power. We find that increased import penetration is associated with lower price cost margins in sectors where product market concentration is relatively high.
In this paper, we analyze the relationship between exports, imports and firm productivity. We use a rich product-firm-level dataset providing both revenue and quantities of all products for a large panel of Danish manufacturing firms over the period 1998-2008 and link it to firms' international trade transactions by product. We use our detailed product level information to compute a firm level deflator and avoid the criticism of biased estimates due to the use of industry level deflator. We find that both importing and exporting behaviours are strongly associated with productivity, but firms involved in both importing and exporting are the most productive. We also find evidence of a self-selection into importing and exporting but no learning effect. Finally, we try to distinguish between cost effect and product quality effect by analyzing the importance of the origin of imports and the destination of exports. We find that both imports from countries with abundant and cheap labor like China and from countries with similar level of development matter, although the mechanism through
We estimate fi rm-level markups and test some micro-level predictions of a model of international trade with heterogeneous fi rms and endogenous markups. We use a theoretical framework extended Melitz and Ottaviano (2008) model that features both quality and spatial differentiation across fi rms. We draw a map of markup distribution and export participation in France. We fi nd that fi rm markups are positively related to fi rm productivity and negatively related to the toughness of local competition. We fi nd evidence that markups are higher for exporters, what appears to indicate that the quality-enhancing channel overbalances the price-depressing channel of global competition.
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