Markets and Markups: A New Empirical Framework and Evidence on Exporters from China
Giancarlo Corsetti (),
Meredith Crowley (),
Lu Han () and
Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
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)
New Economics Papers: this item is included in nep-cna, nep-opm and nep-tra
Note: gc422, mc865, lh420
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Working Paper: Markets and Markup: A New Empirical Framework and Evidence on Exporters from China (2019)
Working Paper: Markets and Markups: A New Empirical Framework and Evidence on Exporters from China (2018)
Working Paper: Markets and markups: a new empirical framework and evidence on exporters from China (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1815
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