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The Growth of Firms, Markets and Rents: Evidence from China

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  • Daniel Berkowitz

    (University of Pittsburgh)

  • Shuichiro Nishioka

    (West Virginia University, Department of Economics)

Abstract

Using recent methods for estimating firm-level markups and profit shares, we document that Chinese manufacturing firms collected more rents following China's accession to the World Trade Organization (WTO). This is because the net entry of firms lagged the massive growth in the domestic market. These effects were particularly strong in domestic markets where state ownership was pervasive. While selection on large productive firms drove the rise in the aggregate markups in the United State (De Loecker et al, 2020), these competitive forces played a secondary role in Chinese manufacturing.

Suggested Citation

  • Daniel Berkowitz & Shuichiro Nishioka, 2022. "The Growth of Firms, Markets and Rents: Evidence from China," Working Papers 22-05, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:22-05
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1061&context=econ_working-papers
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    1. Ralph de Haas & Sergei Guriev & Alexander Stepanov, 2022. "State Ownership and Corporate Leverage Around the World," SciencePo Working papers Main hal-03878686, HAL.

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    More about this item

    Keywords

    Markups; Profit shares; Net entry; Market expansion; Trade liberalization in China;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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