Markets and Markups: Evidence on the Rising Market Power of Exporters from China

Giancarlo Corsetti, Lu Han, Meredith Crowley and Huasheng Song

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: We develop an empirical framework that decomposes the export price elasticity to the exchange rate into contributions from markup and marginal cost elasticities. This framework embodies a new estimator of the markup elasticity that controls for marginal costs and endogenous market participation, and a new classification of products based on Chinese linguistics that helps refine the analysis of firms' market power. Using Chinese customs data, we document a two- to three-fold increase in markup elasticities across product and firm types after 2005, indicating exporters from China acquired substantial market power in foreign markets.

Keywords: China; differentiated goods; exchange rate; markup elasticity; pricing-to-market; product classification; trade pattern (search for similar items in EconPapers)
JEL-codes: F14 F31 F41 (search for similar items in EconPapers)
Date: 2018-02-13
New Economics Papers: this item is included in nep-cna, nep-opm and nep-tra
Note: gc422, mc865, lh420
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1815

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