Markups and Firm-Level Export Status

Jan De Locker () and Frédéric Warzynski
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Jan De Locker: Department of Economics, Aarhus School of Business, Postal: Frichshuset Hermodsvej 22, 8230 Åbyhøj , Denmark
Authors registered in the RePEc Author Service: Jan K. De Loecker ()

No 09-4, Working Papers from University of Aarhus, Aarhus School of Business, Department of Economics

Abstract: We derive an estimating equation to estimate markups using the insight of Hall (1986) and the control function approach of Olley and Pakes (1996). We rely on our method to explore the relationship between markups and export behavior using plant-level data. We find significantly higher markups when we control for unobserved productivity shocks. Furthermore, we find significant higher markups for exporting firms and present new evidence on markup-export status dynamics. More specifically, we find that firms’ markups significantly increase (decrease) after entering (exiting) export markets. We see these results as a first step in opening up the productivity-export black box, and provide a potential explanation for the big measured productivity premia for firms entering export markets.

Keywords: Markups; Control Function; Productivity; Exporting Behavior (search for similar items in EconPapers)
JEL-codes: A10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-int
Date: 2009-01-01
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Related works:
Working Paper: Markups and Firm-level Export Status (2009)
Working Paper: Markups and firm-level export status (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:aareco:2009_004

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