Trade Liberalization and Markup Dispersion: Evidence from China's WTO Accession
American Economic Journal: Applied Economics
vol. 7,
no. 4, October 2015
(pp. 221-53)
Abstract
In this paper, we empirically investigate whether trade liberalization affects markup dispersion, a potential source of resource misallocation. The identification uses China's WTO accession at the end of 2001. We show that trade liberalization reduces markup dispersion within a narrowly defined industry. We also examine both price and cost responses to trade liberalization, as well as heterogeneous effects across firms and across locations. Our study contributes to the literature by identifying another potential channel through which free trade benefits a nation. (JEL F13, L11, O14, O19, P23, P31, P33)Citation
Lu, Yi, and Linhui Yu. 2015. "Trade Liberalization and Markup Dispersion: Evidence from China's WTO Accession." American Economic Journal: Applied Economics, 7 (4): 221-53. DOI: 10.1257/app.20140350Additional Materials
JEL Classification
- F13 Trade Policy; International Trade Organizations
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology
- O19 International Linkages to Development; Role of International Organizations
- P23 Socialist Systems and Transitional Economies: Factor and Product Markets; Industry Studies; Population
- P31 Socialist Enterprises and Their Transitions
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
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