Concentration and Markups in International Trade

Vanessa Alviarez, Michele Fioretti, Ken Kikkawa and Monica Morlacco

No 34114, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper derives a closed-form expression linking aggregate markups on imported inputs to concentration in a model of firm-to-firm trade with two-sided market power. Our theory extends standard oligopoly insights in two dimensions. First, it reveals that markups increase with exporter concentration and decrease with importer concentration, reflecting the balance of oligopoly and oligopsony forces. Second, it adapts conventional market definitions to reflect rigid trading relationships, yielding new concentration measures that capture competition in firm-to-firm trade. Analysis of Colombian transaction-level import data shows these differences are key to understanding markup dynamics in international trade.

JEL-codes: F1 F12 F14 (search for similar items in EconPapers)
Date: 2025-08
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Working Paper: Concentration and Markups in International Trade (2025)
Working Paper: Concentration and Markups in International Trade (2025)
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