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

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

No 13904, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Firms that dominate global trade export to multiple countries and frequently change their foreign destinations. We develop an estimator of the destination-specific markup elasticity to the exchange rate that controls for endogenous market selection. To proxy for firms' power in local markets, we introduce a new classification of products based on Chinese linguistics that distinguishes between highly and less differentiated goods. Using Chinese customs data, we show that controlling for selectivity unveils significant pricing-to-market for highly differentiated goods. Measured in the importer's currency, the prices of highly differentiated goods are more stable than those of less differentiated products.

Keywords: China; differentiated goods; Exchange Rates; markup elasticity; pricing-to-market; product classification; Trade Elasticity (search for similar items in EconPapers)
JEL-codes: F14 F31 F41 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-int, nep-opm and nep-tra
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Related works:
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
Working Paper: Markets and markups: a new empirical framework and evidence on exporters from China (2018) Downloads
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