International Trade and Corporate Market Power
34 Pages Posted: 12 Aug 2020
Date Written: July 1, 2020
This paper examines the effect of international trade on corporate market power in emerging market economies and developing countries, with a special focus on sub-Saharan Africa. The analysis is based on a large firm-level dataset, tariff data by sector and aggregate indicators of international trade for the period 2000-17. Greater trade liberalization and trade integration are associated with significant declines in market power, with the effect being more pronounced for firms in the manufacturing and ICT sectors, private sector firms, and firms with higher initial markups. Firms in sub-Saharan Africa tend to experience significantly lower markups after allowing greater trade integration. The effects of trade liberalization on market power materializes over time, and there are significant complementarities between trade reforms and real sector reforms.
Keywords: Real sector, Economic policy, Economic reforms, Patterns of trade, Bilateral trade, Commodity trade, competition, developing countries, emerging markets, international trade, market power, markups, trade liberalization., WP, institutional quality, markup, non-tariff trade barrier, tariff rate
JEL Classification: D40, F10, P11, F13, E01, F1, E2, G21
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