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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 - CEPR, FERDI - Fondation pour les Etudes et Recherches sur le Développement International)

  • Melise Jaud

    (UNIL - Université de Lausanne = University of Lausanne, La Banque mondiale - The World Bank - La Banque mondiale - The World Bank)

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
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    Cited by:

    1. Clément Nedoncelle, 2021. "Temperatures, Firm Size and Exports in Developing Countries [Températures, Taille des Firmes, et Exportations dans les Pays en Développement]," Post-Print hal-03803308, HAL.
    2. Cali,Massimiliano & Montfaucon,Angella Faith Lapukeni, 2021. "Non-Tariff Measures, Import Competition, and Exports," Policy Research Working Paper Series 9801, The World Bank.
    3. Vincent Rebeyrol, 2023. "Protection Without Discrimination," The Economic Journal, Royal Economic Society, vol. 133(655), pages 2807-2827.
    4. Lili Yan Ing & Olivier Cadot & Muhammad Rizqy Anandhika & Shujiro Urata, . "Non-Tariff Measures in ASEAN: A Simple Proposal," Chapters, in: Lili Yan Ing & Santiago Fernandez de Cordoba & Olivier Cadot (ed.), Non-Tariff Measures in ASEAN, chapter 2, pages 13-36, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Arnaud Z. Dragicevic, 2019. "Market Coordination Under Non-Equilibrium Dynamics," Networks and Spatial Economics, Springer, vol. 19(3), pages 697-715, September.
    6. Olivier CADOT & Patricia AUGIER & Marion DOVIS, 2016. "Regulatory harmonization, profits, and productivity: Firm-level evidence from Morocco," Working Papers P162, FERDI.
    7. Vincent Rebeyrol, 2023. "Protection Without Discrimination," The Economic Journal, Royal Economic Society, vol. 133(655), pages 2807-2827.
    8. Curzi, Daniele & Schuster, Monica & Maertens, Miet & Olper, Alessandro, 2020. "Standards, trade margins and product quality: Firm-level evidence from Peru," Food Policy, Elsevier, vol. 91(C).
    9. Georg Schneider & Frank Stähler & Georg U. Thunecke, 2022. "The (Non-)Neutrality of Value-Added Taxation," CESifo Working Paper Series 9663, CESifo.
    10. Dolabella, Marcelo, 2020. "Bilateral effects of non-tariff measures on international trade: Volume-based panel estimates," Comercio Internacional 46014, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    11. Macedoni, Luca & Weinberger, Ariel, 2022. "Quality heterogeneity and misallocation: The welfare benefits of raising your standards," Journal of International Economics, Elsevier, vol. 134(C).
    12. Dela-Dem Doe Fiankor & Daniele Curzi & Alessandro Olper, 2021. "Trade, price and quality upgrading effects of agri-food standards [Endogenous Trade Policy with Heterogeneous Firms]," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 48(4), pages 835-877.
    13. Ariel Weinberger & Luca Macedoni, 2023. "International Spillovers of Quality Regulations," Working Papers 2023-10, The George Washington University, Institute for International Economic Policy.
    14. Dela‐Dem Doe Fiankor & Oliver‐Ken Haase & Bernhard Brümmer, 2021. "The Heterogeneous Effects of Standards on Agricultural Trade Flows," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(1), pages 25-46, February.
    15. Rashid, Muhammad Mustafa, 2018. "Repercussions of International Trade on the Market Power of Firms in Different Market Structures," MPRA Paper 89889, University Library of Munich, Germany.
    16. Luca Macedoni & Ariel Weinberger, 2021. "Quality Misallocation, Trade, and Regulations," CESifo Working Paper Series 9041, CESifo.

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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
    • 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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