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Markups, bargaining power and offshoring: An empirical assessment

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  • Lourdes Moreno

    (Universidad Complutense de Madrid and GRIPICO)

  • Diego Rodríguez

    (Universidad Complutense de Madrid and GRIPICO)

Abstract

This paper tests the pro-competitive effect of imports on product and labour markets for Spanish manufacturing firms in the period 1990-2005. In doing so, it takes into account the type of imported products: final vs intermediate. Markups are estimated following the procedure suggested by Roeger (1995) and including an efficient bargaining model. The observed heterogeneity among firms is parameterized to consider additional product standardization and market concentration. The results support the Imports as Market Discipline hypothesis for importers of final goods, while firms that offshore intermediate inputs show similar markups to non-importers. Additionally, the union bargaining power is smaller the more final-goods oriented imports are and the more homogeneous is the type of goods elaborated by firms.

Suggested Citation

  • Lourdes Moreno & Diego Rodríguez, 2010. "Markups, bargaining power and offshoring: An empirical assessment," Working Papers 10-05, Asociación Española de Economía y Finanzas Internacionales.
    • Handle: RePEc:aee:wpaper:1005
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    Cited by:

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    2. Stefano Schiavo & Lionel Nesta, 2017. "International Competition and Rent Sharing in French Manufacturing," DEM Working Papers 2017/07, Department of Economics and Management.
    3. Li, Yifan & Miao, Zhuang, 2024. "The rise of superstar firms in the United States: The role of global sourcing," Journal of Comparative Economics, Elsevier, vol. 52(1), pages 113-144.
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    5. Worku Gebeyehu, 2017. "Trade Reforms, Mark-Ups and Bargaining Power of Workers: the Case of Ethiopian Manufacturing Firms," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 25(1), March.
    6. Ana Cristina Soares & João Amador, 2013. "Competition in the portuguese economy: Estimated price-cost margins under imperfect labour markets," Working Papers w201308, Banco de Portugal, Economics and Research Department.
    7. Ana Cristina Soares, 2020. "Price-cost margin and bargaining power in the European Union," Empirical Economics, Springer, vol. 59(5), pages 2093-2123, November.
    8. Mauro Caselli & Stefano Schiavo, 2020. "Markups, import competition and exporting," The World Economy, Wiley Blackwell, vol. 43(5), pages 1309-1326, May.
    9. de Pinto, Marco & Michaelis, Jochen, 2019. "The labor market effects of trade union heterogeneity," Economic Modelling, Elsevier, vol. 78(C), pages 60-72.
    10. Lionel Nesta & Stefano Schiavo, 2018. "International Competition and Rent Sharing in French Manufacturing: A Firm-Level Analysis," EconPol Working Paper 19, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    11. Marco de Pinto & Jochen Michaelis, 2017. "Firm Selection and the Role of Union Heterogeneity," MAGKS Papers on Economics 201743, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    12. Leahy, Dermot & Montagna, Catia, 2012. "Strategic investment and international outsourcing in unionised oligopoly," Labour Economics, Elsevier, vol. 19(2), pages 260-269.
    13. Cristina Fernández & Aitor Lacuesta & José Manuel Montero & Alberto Urtasun, 2015. "Heterogeneity of markups at the firm level and changes during the great recession: the case of spain," Working Papers 1536, Banco de España.
    14. João Amador & Ana Cristina Soares, 2017. "Markups and bargaining power in tradable and non-tradable sectors," Empirical Economics, Springer, vol. 53(2), pages 669-694, September.
    15. Caselli, Mauro & Nesta, Lionel & Schiavo, Stefano, 2021. "Imports and labour market imperfections: Firm-level evidence from France," European Economic Review, Elsevier, vol. 131(C).
    16. Luciano Fanti & Domenico Buccella, 2019. "When unionisation is profitable for firms in network industries," Metroeconomica, Wiley Blackwell, vol. 70(4), pages 711-722, November.
    17. Dumont, Michel & Rayp, Glenn & Willemé, Peter, 2012. "The bargaining position of low-skilled and high-skilled workers in a globalising world," Labour Economics, Elsevier, vol. 19(3), pages 312-319.
    18. Buccella, Domenico & Fanti, Luciano, 2020. "Do labour union recognition and bargaining deter entry in a network industry? A sequential game model," Utilities Policy, Elsevier, vol. 64(C).
    19. Luis C. Corchón & Lourdes Moreno, 2016. "Interpreting Markups in Spanish Manufacturing: The Exponential Model," Springer Series in Game Theory, in: Pierre von Mouche & Federico Quartieri (ed.), Equilibrium Theory for Cournot Oligopolies and Related Games, pages 119-131, Springer.
    20. Juan A. Máñez Castillejo & Consuelo Mínguez Bosque & María E. Rochina Barrachina & Juan A. Sanchis Llopis, 2020. "Trading activities, productivity and markups: Evidence for Spanish manufacturing," The World Economy, Wiley Blackwell, vol. 43(3), pages 644-680, March.
    21. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.
    22. repec:spo:wpmain:info:hdl:2441/2d13t3kn6v8mop0no1md4bjn1i is not listed on IDEAS
    23. M. Dumont & G. Rayp & P. Willemé, 2010. ""Ménage à trois" in a globalizing world: bargaining between firms, low-skilled and high-skilled workers," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/687, Ghent University, Faculty of Economics and Business Administration.

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    More about this item

    Keywords

    Markups; Offshoring; Bargaining power.;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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