IDEAS home Printed from https://ideas.repec.org/a/cup/macdyn/v23y2019i07p2959-3009_00.html
   My bibliography  Save this article

Markup Premia Of Exporters: Because Of Exporting, Or In Spite Of It?

Author

Listed:
  • McQuoid, Alexander
  • Rubini, Loris

Abstract

We study the effect of exporting on markups building on two stylized facts: (1) exporters charge higher markups than nonexporters and (2) firms increase markups when they start to export. These facts suggest that exporting increases markups, but the causal relationship has not been studied directly. To do so, we modify Melitz and Ottaviano (2008) by adding decreasing returns technologies and demand and productivity shocks to account for sales correlations across markets. We calibrate and simulate a trade cost reduction. Old exporters increase markups on average, while new ones reduce them. Three mechanisms matter: (1) cost reductions are not fully passed on to prices, (2) firms expand, increasing marginal cost, and (3) foreign demand is more elastic than domestic demand. The first effect dominates along the intensive margin, while the others prevail along the extensive margin. Thus, exporters charge larger markups in spite of exporting, not because of it.

Suggested Citation

  • McQuoid, Alexander & Rubini, Loris, 2019. "Markup Premia Of Exporters: Because Of Exporting, Or In Spite Of It?," Macroeconomic Dynamics, Cambridge University Press, vol. 23(7), pages 2959-3009, October.
    • Handle: RePEc:cup:macdyn:v:23:y:2019:i:07:p:2959-3009_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1365100517001018/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yaghoob Jafari & Maximilian Koppenberg & Stefan Hirsch & Thomas Heckelei, 2023. "Markups and export behavior: Firm‐level evidence from the French food processing industry," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(1), pages 174-194, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:macdyn:v:23:y:2019:i:07:p:2959-3009_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/mdy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.