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Export activity, persistence and mark-ups

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Abstract:

This article addresses the differences in margins across exporting and nonexporting firms. We jointly estimate a translog cost function, a variable factor share equation and price-cost margin equations to analyse the effect of persistence in export activity on margins. Results indicate that nonexporters have smaller margins than persistent exporters and firms that entered foreign markets during the nineties. However, larger export ratio is negatively associated with margins for persistent exporters. It suggests that efficiency advantages for exporters are partially compensated by higher competitive pressure in international markets. These results are in accordance with the predictions of Melitz and Ottaviano (2005).

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840701604529

Affiliations: 1: Departamento de Fundamentos de Analisis Economico I, Universidad Complutense de Madrid, Madrid, Spain 2: GRIPICO, Universidad Complutense de Madrid, Madrid, Spain

Publication date: February 1, 2010

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