Global Value Chains (GVCs) participation and Markups

Dolores Añon Higón and Ionnanis Bournakis
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Dolores Añon Higón: Department of Applied Economics II and ERI-CES, Faculty of Economics, Universitat de València, Avda. Tarongers, s/n, 46022 Valencia (Spain)
Ionnanis Bournakis: SKEMA Business School. Avenue Willy Brandt. 59777 Euralille, France

No 2403, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: We examine the relationship between firms’ participation in global value chains (GVCs) and price markups. We use data from 14,316 firms in six European countries obtained from AMADEUS data linked to the EFIGE project. There is substantial heterogeneity between countries and industries in terms of firm-specific time variant markups. After controlling for sample selection bias using coarsened exact matching (CEM), we find that firms involved in exporting produced-to-order goods and importing service and material inputs have between a three and four percent markup premium relative to nontrading firms. Our results remain robust to alternative definitions of GVC participation, different data matching techniques (Propensity Score Matching) and different markup estimates. Our findings contribute to the scarce but increasingly significant literature on markup heterogeneity and provide ample opportunities for designing industrial policies.

Keywords: FDI; migration; elasticity of substitution; gender; discrimination (search for similar items in EconPapers)
JEL-codes: F21 F22 F23 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-eur, nep-int and nep-tid
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