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Input Trade Liberalization And Markup Distribution: Evidence From China

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  • Zhengwen Liu
  • Hong Ma

Abstract

We utilize an unprecedented liberalization episode in China, namely its World Trade Organization accession, to estimate the impact of trade liberalization on firm markup and markup distribution. Using a panel data quantile regression, we show that the impact of tariff reduction on markup can be heterogeneous to different firms, resulting in an unevenly distributed markup change across firms. In particular, reduction in output tariff reduces markup and markup dispersion, while reduction in input tariff increases markup and markup dispersion. (JEL F12, F13)

Suggested Citation

  • Zhengwen Liu & Hong Ma, 2021. "Input Trade Liberalization And Markup Distribution: Evidence From China," Economic Inquiry, Western Economic Association International, vol. 59(1), pages 344-360, January.
    • Handle: RePEc:bla:ecinqu:v:59:y:2021:i:1:p:344-360
    DOI: 10.1111/ecin.12895
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    References listed on IDEAS

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    3. Mukherjee, Subhadip & Chanda, Rupa, 2021. "Tariff liberalization and firm-level markups in Indian manufacturing," Economic Modelling, Elsevier, vol. 103(C).

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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