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Trade Policy and Market Power: Firm-Level Evidence

Author

Listed:
  • Alan Asprilla

    (UNIL - Université de Lausanne = University of Lausanne)

  • Nicolas Berman

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Olivier Cadot

    (UNIL - Université de Lausanne = University of Lausanne, CEPR - Center for Economic Policy Research, FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

  • Melise Jaud

    (UNIL - Université de Lausanne = University of Lausanne, BM = WB - La Banque Mondiale = The World Bank - WBG = GBM - World Bank Group = Groupe Banque Mondiale)

Abstract

This article identifies the effect of trade policy on market power through new data and a new identification strategy. We identify market power by observing how exporting firms price discriminate across markets following variations in bilateral exchange rates. Pricing-to-market is prevalent in all countries in our sample, even among small firms, although it is increasing in firm size. More importantly, we find that the effect of nontariff measures (NTMs) is not isomorphic to that of tariffs. Whereas tariffs reduce the market power of foreign firms through rent-shifting effects, NTMs reinforce the market power of nonexiting firms, domestic and foreign alike.

Suggested Citation

  • Alan Asprilla & Nicolas Berman & Olivier Cadot & Melise Jaud, 2019. "Trade Policy and Market Power: Firm-Level Evidence," Post-Print hal-02394864, HAL.
    • Handle: RePEc:hal:journl:hal-02394864
    DOI: 10.1111/iere.12409
    as

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    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
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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