VAT shocks and mark-ups: an empirical analysis based on firm-level data

TVA et taux de marge: une analyse empirique sur données d'entreprises exportatrices françaises

Philippe Andrade, Martine Carré and Agnès Bénassy-Quéré ()
Additional contact information
Philippe Andrade: Banque de France - Banque de France
Martine Carré: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Agnès Bénassy-Quéré: CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique

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Abstract: We study how French exporters react to a VAT shock in a destination country. As VAT shocks are by nature almost permanent, exogenous, and without impact on marginal costs, the subsequent price reaction makes it possible to identify a pure demand-led mark-up adjustment. The results of an analysis of French customs data for 1995-2005 indicate a 67 % average mark-up adjustment for consumer goods. The adjustment is greaterfor companies, sectors, and destinations with a relatively higher market share. We then use our estimates and the Atkeson-Burstein (2008) theoretical framework to derive the distribution of mark-up adjustments of the various sector-destination pairs.

Keywords: value-added tax; mark-up variation; firm-level data; export price; pass-through; prix à l'exportation; données de firme; Taxe à la Valeur Ajoutée (TVA) (search for similar items in EconPapers)
Date: 2017-04-28
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