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

Meredith Crowley, Giancarlo Corsetti, Lu Han and Huasheng Song

No 13904, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Firms that dominate global trade export to multiple countries and frequently change their foreign destinations. We develop a new empirical framework for analysing markup elasticities to the exchange rate in this environment. The framework embodies a new estimator of these elasticities that controls for endogenous market participation and a new classification of products based on Chinese linguistics to proxy for firms' power in local markets. Applying this framework to Chinese customs data, we document significant pricing-to-market for highly differentiated goods. Measured in the importer's currency, the prices of highly differentiated goods are far more stable than those of less differentiated products.

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: 2019-08
New Economics Papers: this item is included in nep-int, nep-opm and nep-tra
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Citations: View citations in EconPapers (8)

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Related works:
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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