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Globalization and the markups of European firms

Author

Listed:
  • Gabor Bekes

    (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences and CEPR)

  • Cecilia Hornok

    (Kiel Institute for the World Economy)

  • Balázs Muraközy

    (Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

Abstract

We use a unique cross-section survey of manufacturing firms from four European countries (France, Germany, Italy, Spain) linked with balance sheet data to study the relationship between key aspects of globalization and firm-level markups. The main results are: (i) Exporting is positively correlated with markups; (ii) Importing intermediate inputs and outsourcing are also positively correlated with markups; (iii) Firms with affiliates have higher markups than other firms, while simply membership in a group or being foreign-owned seem to be less important; (iv) Perceived competition from low-cost markets is negatively correlated with markups; (v) Higher quality production and innovation, especially if it results in IP, has a strong positive relationship with markups; (vi) While these variables are correlated, they are significant in a joint model including all four groups, and `fully globalized' firms tend to charge around 100% higher markups than non-globalized firms.

Suggested Citation

  • Gabor Bekes & Cecilia Hornok & Balázs Muraközy, 2016. "Globalization and the markups of European firms," CERS-IE WORKING PAPERS 1618, Institute of Economics, Centre for Economic and Regional Studies.
  • Handle: RePEc:has:discpr:1618
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    More about this item

    Keywords

    markups; exporting; importing; FDI; innovation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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