International Trade and Firm-Level Markups when Location and Quality Matter

Flora Bellone (), Patrick Musso (), Lionel Nesta and Frédéric Warzynski

Working Papers from CEPII research center

Abstract: In this paper, we estimate firm-level markups and test some micro-level predictions of a model of international trade with heterogeneous firms and endogenous markups. Our theoretical framework is an extended version of the Melitz and Ottaviano (2008) (MO) model that features both quality and spatial differentiation across firms. In line with our model, we find that firm markups are positively related to firm productivity and negatively related to the toughness of local competition. Considering the relationship between firm markups and exports, we find evidence that markups are higher for exporters, what appears to indicate that the quality-enhancing channel overbalances the price-depressing channel of global competition.

Keywords: Mark-ups; International Trade; Productivity (search for similar items in EconPapers)
JEL-codes: D24 F14 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-bec, nep-eff and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Journal Article: International trade and firm-level markups when location and quality matter (2016)
Working Paper: International Trade and Firm-Level Markups when Location and Quality Matter (2016)
Working Paper: International Trade and Firm-Level Markups when Location and Quality Matter (2016)
Working Paper: International Trade and Firm-level Markups when Location and Quality Matter (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2014-15

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