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Globalization, Technological Change and Market Power in Latin America: Evidence for Chile and Colombia

Author

Listed:
  • Bracco, Jessica
  • Brambilla, Irene
  • Cerimelo, Manuela
  • César, Andrés
  • Falcone, Guillermo

Abstract

This paper studies concentration and market power in Chile and Colombia and the role that globalization and automation have had in shaping these two phenomena. Using panels of firm surveys, we compute firm-level markups and industry-level concentration measures. Applying a difference in differences methodology that relies on variation across industries in exposure to robotization technology, import competition from China and tariff declines in US markets due to the signature of free trade agreements, we study the causal effects of these shocks on market power and concentration. We find that, while robotization technology has reduced markups on average, it has increased markups and total factor productivity of top industry firms; that the pro-competitive effect of Chinese imports has indeed led to a decrease in market power of domestic firms; and that increased export opportunities due to free trade agreements have led to an increase in market power, with interesting heterogeneities across the two countries.

Suggested Citation

  • Bracco, Jessica & Brambilla, Irene & Cerimelo, Manuela & César, Andrés & Falcone, Guillermo, 2025. "Globalization, Technological Change and Market Power in Latin America: Evidence for Chile and Colombia," IDB Publications (Working Papers) 14099, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:14099
    DOI: http://dx.doi.org/10.18235/0013531
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    Keywords

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    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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