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Markets and Markups: A New Empirical Framework and Evidence on Exporters from China

Giancarlo Corsetti (), Meredith Crowley (), Lu Han () and Huasheng Song

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Exporting firms frequently change the set of foreign markets they serve: changes in the pattern of destinations for a firm's product convey information on unobservable factors affecting pricing and market participation. Building on this insight, we show how to construct a "trade-pattern" fixed effect estimator that helps reduce omitted variable and selection biases in analyses of pricing-to-market. Using this estimator and a new product classification, we document substantial markup elasticities to the exchange rate among exporters of highly differentiated goods, accounting for half of China's exports. Conversely, we find little evidence of pricing-to-market in the trade of less differentiated goods.

Keywords: exchange rate; markup elasticity; pricing-to-market; trade pattern; product classification; differentiated goods; China (search for similar items in EconPapers)
JEL-codes: F14 F31 F41 (search for similar items in EconPapers)
Date: 2018-02-13
New Economics Papers: this item is included in nep-cna, nep-opm and nep-tra
Note: gc422, mc865, lh420
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

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https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1815.pdf

Related works:
Working Paper: Markets and Markup: A New Empirical Framework and Evidence on Exporters from China (2019) Downloads
Working Paper: Markets and Markups: A New Empirical Framework and Evidence on Exporters from China (2018) Downloads
Working Paper: Markets and markups: a new empirical framework and evidence on exporters from China (2018) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1815

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