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Markets and Markups: Evidence on the Rising Market Power of Exporters from China

Author

Listed:
  • Corsetti, G.
  • Han, L.
  • Crowley, M.
  • Song, H.

Abstract

We develop an empirical framework that decomposes the export price elasticity to the exchange rate into contributions from markup and marginal cost elasticities. This framework embodies a new estimator of the markup elasticity that controls for marginal costs and endogenous market participation, and a new classification of products based on Chinese linguistics that helps refine the analysis of firms' market power. Using Chinese customs data, we document a two- to three-fold increase in markup elasticities across product and firm types after 2005, indicating exporters from China acquired substantial market power in foreign markets.

Suggested Citation

  • Corsetti, G. & Han, L. & Crowley, M. & Song, H., 2018. "Markets and Markups: Evidence on the Rising Market Power of Exporters from China," Cambridge Working Papers in Economics 1815, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:1815
    Note: gc422, mc865, lh420
    as

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    References listed on IDEAS

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    Cited by:

    1. Corsetti, Giancarlo & Crowley, Meredith & Han, Lu, 2022. "Invoicing and the dynamics of pricing-to-market: Evidence from UK export prices around the Brexit referendum," Journal of International Economics, Elsevier, vol. 135(C).
    2. Anatoli Colicev & Joris Hoste & Jozef Konings, 2019. "Exchange Rate Pass-through after a Large Depreciation," Working Papers 201902, University of Liverpool, Department of Economics.
    3. Crowley, M. A. & Han, L. & Son, M., 2024. "The Swift Decline of the British Pound: Evidence from UK Trade-invoicing after the Brexit Vote," Cambridge Working Papers in Economics 2413, Faculty of Economics, University of Cambridge.
    4. Chung, Wanyu & Perroni, Carlo, 2020. "Rules of Origin and Market Power," CAGE Online Working Paper Series 504, Competitive Advantage in the Global Economy (CAGE).
    5. David C. López-Valenzuela & Enrique Montes-Uribe & Héctor M. Zárate-Solano & Alvaro Carmona-Duarte, 2019. "Determinantes y evolución entre precios y cantidades de las exportaciones industriales de Colombia: un estudio a partir de un modelo de Panel-VAR," Borradores de Economia 1075, Banco de la Republica de Colombia.
    6. Delgado, Mercedes & Mills, Karen G., 2020. "The supply chain economy: A new industry categorization for understanding innovation in services," Research Policy, Elsevier, vol. 49(8).
    7. Obashi, Ayako, 2019. "Trade agreements with cross-border unbundling," Journal of the Japanese and International Economies, Elsevier, vol. 53(C), pages 1-1.
    8. Antonio Acconcia & Elisa Scarinzi, 2022. "The effects of local demand and supply restrictions on markup," Temi di discussione (Economic working papers) 1370, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    China; differentiated goods; exchange rate; markup elasticity; pricing-to-market; product classification; trade pattern;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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