Markups and export behavior: Firm‐level evidence from the French food processing industry

Abstract

The relationship between a firm's markups and its export behavior is highly relevant to individual firms' strategic decisions as well as to governments' policies regarding competition. We investigate the impact of markups on firms' decisions to export and resulting export intensity in the French food processing industry. Moreover, we assess the effect of entry into and remaining in the export market on firms' markups and evaluate differences in markups between exporters and non-exporters. Our results suggest that higher markups lead to both increased participation in the export market and greater export intensity. In addition, we find that firms obtain higher markups by entering and remaining in the export market. Finally, our results suggest that exporters generate higher markups, on average, than non-exporters. Similar results are found when controlling for differences in firms' productivity. Our findings suggest that trade policies designed to increase firms' participation in export markets, such as limits to border restrictions, may counteract domestic competition policies targeted at price-cost margins.

Markups, organic agriculture and downstream concentration at the example of European dairy farmers

“…It is noteworthy that my mean and median markup estimates far exceed those of earlier studies estimating markups for other sectors (e.g., Autor et al., 2020; De Loecker et al., 2020). Recent applications in the food sector find mean markups ranging from 1.07 to 2.57 for the food manufacturing industry (Curzi et al., 2021; Jafari et al., 2022; Koppenberg & Hirsch, 2022b; Lopez et al., 2018) and from 1.18 to 3.57 for the food retailing sector (Hirsch & Koppenberg, 2020; Koppenberg & Hirsch, 2022a; Sckokai et al., 2013). However, two pivotal differences between manufacturing and service industries and the farming sector drive this result.…”

“…How to cite this article: Koppenberg, M. (2023). Markups, organic agriculture and downstream concentration at the example of European dairy farmers.…”

“…Examples in the farming context are quality of land, climatic conditions or access to infrastructure. However, as long as this cross‐farm variation is farm‐specific and changes little over time, introducing fixed effects or conducting within‐differencing will resolve this issue (De Loecker et al., 2016; Jafari et al., 2022). Since I within‐difference the data before the estimation, I assume that the bias due to the use of price indices is negligible.…”

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