Trade Liberalization and Markup Dispersion: Evidence from China's WTO Accession

Yi Lu and Linhui Yu

American Economic Journal: Applied Economics, 2015, vol. 7, issue 4, 221-53

Abstract: In this paper, we empirically investigate whether trade liberalization affects markup dispersion, a potential source of resource misallocation. The identification uses China's WTO accession at the end of 2001. We show that trade liberalization reduces markup dispersion within a narrowly defined industry. We also examine both price and cost responses to trade liberalization, as well as heterogeneous effects across firms and across locations. Our study contributes to the literature by identifying another potential channel through which free trade benefits a nation. (JEL F13, L11, O14, O19, P23, P31, P33)

JEL-codes: F13 L11 O14 O19 P23 P31 P33 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/app.20140350
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Citations: View citations in EconPapers (180)

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