Imperfect Competition in Firm-to-Firm Trade

Kikkawa, Ayumu Ken; Magerman, Glenn; Dhyne, Emmanuël

doi:10.2139/ssrn.3389836

Cited by 20 publications

(16 citation statements)

References 111 publications

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“…Regarding theory, our model extends the works of Antràs et al (2017) and Bernard et al (2019) and thus is related to the literature on firms' sourcing decisions in international and regional trade (Antràs et al, 2017;Tintelnot et al, 2018;Bernard et al, 2019;Kikkawa et al, 2019). 6 We contribute to the literature by considering a setting where upstream and downstream efficiencies are both embedded in firms, who self-select into different stages of the value chain.…”

Section: Introductionmentioning

confidence: 89%

“…6 Building on Tintelnot (2017), Antràs et al (2017) study firms' optimal sourcing decisions across countries, and predict that the intensive and extensive margins of sourcing are positively related to firm productivity. Redefining countries as locations within a country, Tintelnot et al (2018), Bernard et al (2019), and Kikkawa et al (2019) adapt the framework of Antràs et al (2017) to the context of domestic production networks and study how endogenous firm-to-firm connections, geography, and markups affect shock transmissions and firm performance, respectively. Chaney (2016), , and Johnson (2018) provide excellent reviews of the network models in international trade.…”

Section: Introductionmentioning

confidence: 99%

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Made and Created in China: Super Processors and Two-way Heterogeneity

Chen

Erbahar

2019

SSRN Journal

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In this paper, we show that there exists a special breed of firms that are active in both ordinary and processing exports. Contrary to the existing literature that describes processing firms as inferior, these mixed firms are superior to other firms in multiple dimensions, and hence we call them "super processors." We build on Antràs et al. (2017) and Bernard et al. (2019) to develop a model in which firms are heterogeneous in multiple stages of production. Firms endogenously choose to become suppliers or final good producers, and those that excel in both manufacturing ability and blueprint quality choose to engage in both activities. We test our model's central prediction by exploiting China's pilot "paperless" processing trade supervision program that lowered the cost of processing trade but left ordinary trade costs unchanged.We find that facilitating processing exports induces productive domestic downstream firms to establish their own trademarks. Our results highlight that processing trade not only leads goods to be "Made in China," but also "Created in China." JEL codes: F1, F12, F13, F14, L11, L21 3 Fernandes and Tang (2015) find that processing firms are less diversified in products and destinations when compared to ordinary exporters, and Yu (2015) shows that their productivity does not change considerably with trade liberalization. Dai et al. (2016) find that compared to non-exporters and ordinary exporters, processing firms have lower revenue productivity, skill intensity, and profitability, and they pay lower wages and spend little on R&D. However, emphasizing that revenue-based total factor productivity (TFP) calculations are confounded by price effects, and thus do not reflect "true" productivity, Li et al. (2018) calculate TFP based on quantity data and find that processing exporters are significantly more productive than non-exporters.4 Yu (2015), Dai et al. (2016), andLi et al. (2018) do include mixed firms (referred to as "hybrid" firms) in their analysis but do not focus on them.

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Section: Introductionmentioning

confidence: 89%

Section: Introductionmentioning

confidence: 99%

Made and Created in China: Super Processors and Two-way Heterogeneity

Chen

Erbahar

2019

SSRN Journal

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“…11 We use the VAT-ID as unit of observation. Papers such as Kikkawa, Magerman, and Dhyne (2018) and Tintelnot, Kikkawa, Mogstad, and Dhyne (2018) aggregate VAT-IDs up to the firm-level using ownership filings from the annual accounts and the foreign ownership filings in the Balance of Payments survey, as they focus on pricing decisions or linkage forming decisions across firms. In this paper we focus on constructing VS measures using the firm-to-firm transactions data, and since the sectors of Belgian enterprises' primary economic activities are recorded for each VAT-ID, we keep the VAT-IDs as the unit of observation.…”

Section: Data Sourcesmentioning

confidence: 99%

Measuring Trade in Value Added With Firm-Level Data

Bems

Kikkawa

2019

SSRN Journal

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“…Given recent evidence on imperfections in intermediate inputs markets by Kikkawa et al (2019) and Morlacco (2019), this latter assumption of price taking for intermediate inputs might be perceived as plants in the market maximise short-run profits. Plant i's short-run profits at time t are given by…”

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confidence: 99%

Organised Labour, Labour Market Imperfections, and Employer Wage Premia

et al. 2020

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This paper examines how collective bargaining through unions and workplace codetermination through works councils shape labour market imperfections and how labour market imperfections matter for employer wage premia. Based on representative German plant data for the years 1999-2016, we document that labour market imperfections are the norm rather than the exception. Wage mark-downs, that is wages below the marginal revenue product of labour rooted in employers' monopsony power, are the most prevalent outcome. We further find that both types of organised labour are accompanied by a smaller prevalence and intensity of wage mark-downs whereas the opposite holds for wage markups , that is wages above the marginal revenue product of labour rooted in workers' monopoly power. Finally, we document a close link between our production-based labour market imperfection measures and employer wage premia. The prevalence and intensity of wage mark-downs are associated with a smaller level and larger dispersion of premia whereas wage markups are only accompanied by a higher premium level.

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Imperfect Competition in Firm-to-Firm Trade

Cited by 20 publications

References 111 publications

Made and Created in China: Super Processors and Two-way Heterogeneity

Made and Created in China: Super Processors and Two-way Heterogeneity

Measuring Trade in Value Added With Firm-Level Data

Organised Labour, Labour Market Imperfections, and Employer Wage Premia

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