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Do information spillovers across products aggravate product market monopoly? An examination with Chinese data

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  • Yu, Zhuangxiong
  • Cheng, Jiajia
  • Mukhopadhaya, Pundarik
  • Dong, Jiemiao

Abstract

The simultaneous presence of accelerating information flows and declining market dynamics has sparked widespread interest. However, existing literature does not fully recognize the causal link between them. Using the China Customs Trade database (2000–2013), this paper studies the impact of information spillovers across products on the intensifying monopoly in China's export product market. It finds that with the strengthening of inter-product information spillovers, big firms' market share and market survival rate increase significantly. Big firms' monopoly power is strengthened because inter-product information spillovers drive them to innovate more strategically and allow them to raise market barriers to entry. However, the aggravated monopoly can only increase the export scale but not improve the product quality, which is unfavorable to long-term economic growth. Finally, a comparison of spillover impacts under different policy interventions reveals that the monopoly risk can be aggravated by the industrial policy but mitigated by the regional policy.

Suggested Citation

  • Yu, Zhuangxiong & Cheng, Jiajia & Mukhopadhaya, Pundarik & Dong, Jiemiao, 2023. "Do information spillovers across products aggravate product market monopoly? An examination with Chinese data," Economic Modelling, Elsevier, vol. 125(C).
    • Handle: RePEc:eee:ecmode:v:125:y:2023:i:c:s0264999323001505
    DOI: 10.1016/j.econmod.2023.106338
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    More about this item

    Keywords

    Export network; Information spillovers; Market monopoly; Matthew effect;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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