Type: Working Paper
Markets and markups : a new empirical framework and evidence on exporters from China
Working Paper, EUI RSC, 2023/27, Pierre Werner Chair Programme
CORSETTI, Giancarlo, CROWLEY, Meredith A., HAN, Lu, SONG, Huasheng, Markets and markups : a new empirical framework and evidence on exporters from China, EUI RSC, 2023/27, Pierre Werner Chair Programme - https://hdl.handle.net/1814/75451
Retrieved from Cadmus, EUI Research Repository
Firms that dominate global trade export to multiple countries and frequently change their foreign destinations. We develop a new empirical framework for analysing markup elasticities to the exchange rate in this environment. The framework embodies a new estimator of these elasticities that controls for endogenous market participation and a new classification of products based on Chinese linguistics to proxy for firms’ power in local markets. Applying this framework to Chinese customs data, we document significant pricing-to-market for highly differentiated goods. Measured in the importer’s currency, the prices of highly differentiated goods are far more stable than those of less differentiated products.
Cadmus permanent link: https://hdl.handle.net/1814/75451
Series/Number: EUI RSC; 2023/27; Pierre Werner Chair Programme
Publisher: European University Institute
Keyword(s): Exchange rate Markup elasticity Pricing-to-market Trade pattern Product classification China Differentiated goods
Sponsorship and Funder information:
We thank Cambridge INET, the Centre For Macroeconomics, and the Economic and Social Research Council (United Kingdom) Brexit Priority Grant R001553/1 for supporting our research. We thank the staff of the HMRC datalab, especially Yee-Wan Yau, for supporting us in our analysis of UK administrative data.
Files associated with this item
- RSC WP 2023 27_V1.pdf
- Full-text in Open Access