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

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

No 2014-37, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: In this paper, we estimate firm-level markups and test some micro-level predictions of a model of international trade with heterogenous firms and endogenous mark-ups. Our theoretical framework is an extended version of the Melitz and Ottaviano (2008) (MO) model which 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 the quality enhancing channel overbalances the price depressing channel of global competition.

Keywords: Markups; Productivity; Exports; Firm-level data; France (search for similar items in EconPapers)
JEL-codes: F12 L1 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2014-11
New Economics Papers: this item is included in nep-bec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Forthcoming in Journal of Economic Geography

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http://195.220.190.85/GREDEG-WP-2014-37.pdf First version, 2014 (application/pdf)

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:gre:wpaper:2014-37

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