Globalization and the markups of European firms

Gábor Békés, Cecília Hornok and Balazs Murakozy

No 1618, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: We use a unique cross-section survey of manufacturing firms from four European countries (France, Germany, Italy, Spain) linked with balance sheet data to study the relationship between key aspects of globalization and firm-level markups. The main results are: (i) Exporting is positively correlated with markups; (ii) Importing intermediate inputs and outsourcing are also positively correlated with markups; (iii) Firms with affiliates have higher markups than other firms, while simply membership in a group or being foreign-owned seem to be less important; (iv) Perceived competition from low-cost markets is negatively correlated with markups; (v) Higher quality production and innovation, especially if it results in IP, has a strong positive relationship with markups; (vi) While these variables are correlated, they are significant in a joint model including all four groups, and `fully globalized' firms tend to charge around 100% higher markups than non-globalized firms.

Keywords: markups; exporting; importing; FDI; innovation (search for similar items in EconPapers)
JEL-codes: D22 D24 F14 L11 L60 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2016-06
New Economics Papers: this item is included in nep-bec, nep-cse, nep-hme, nep-ino, nep-int and nep-tid
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Working Paper: Globalization and the markups of European firms (2016)
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