Do exporters have markup premiums and why (not)? Evidence from China

Chih‐Hai Yang

The World Economy, 2021, vol. 44, issue 4, 956-979

Abstract: This paper examines the relationship between exports and markups in Chinese manufacturing firms. In particular, the investigation focuses on how ownership differentiates the export–markup nexus and how heterogeneity in export contents affects exporters' markups. The export–markup premium is found exclusively in the full sample and domestic firms. In contrast, exporters of foreign‐invested enterprises (FIEs) demonstrate a lower markup than their non‐exporters counterparts, ceteris paribus. The possible channels and mechanisms that result in such results are proposed and discussed. Furthermore, export types and export variety can influence exporters' markups. Ordinary exports carry a higher premium than that of processing exports for domestic exporters; multi‐product exporters exhibit a higher markup than single‐product exporters. The markup effect of export destinations varies between domestic firms and FIEs.

Date: 2021
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