International Trade and Innovation Dynamics with Endogenous Markups
Bibliographic Data
| ID | 9704216 |
|---|---|
| Authors | Laurent Cavenaile (0009-0003-5157-6130, University of Toronto Scarborough and Rotman School of Management , Canada), Pau Roldan-Blanco (0000-0002-5547-5789, Banco de España & CEMFI , Spain, corresponding author), Tom Schmitz (0000-0002-5937-765X, Queen Mary University of London) |
| Year | 2023 |
| Volume | 133 |
| Issue | 651 |
| Pages | 971-1004 |
| Publication date | 2023-03-20 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (PUBLISHER • GB) |
| DOI | 10.1093/ej/ueac085 |
| OpenAlex | W3090786521 |
| Language | EN |
| References cited | 42 |
We argue that the recent increases in market concentration and markups are partly due to an ‘innovation feedback effect’ of globalisation. Lower trade costs increase innovation incentives for global firms. As the winners of the ensuing innovation race increase their technological advantage, concentration and markups rise. We develop an endogenous growth model capturing this effect and calibrate it to US manufacturing data. We find that the increase in trade between 1989 and 2007 raised the aggregate markup by 3.5 percentage points. This is entirely due to innovation: without the innovation response, markups would have fallen by 4 percentage points
Economics · Endogenous growth theory · Globalization · Human capital · Incentive · Industrial organization · International economics · International trade · Macroeconomics · Market economy · Markup language · Microeconomics · Technological change · Economic Growth and Productivity · Firm Innovation and Growth · Global trade and economics
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Trade Liberalization, Exports, and Technology Upgrading
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The Global Decline of the Labor Share
Prices, Markups, and Trade Reform
Improved Access to Foreign Markets Raises Plant-Level Productivity… for Some Plants
The Rise of Market Power and the Macroeconomic Implications
Market Size, Trade, and Productivity
The Fall of the Labor Share and the Rise of Superstar Firms
WTO Accession and Performance of Chinese Manufacturing Firms
Better, Faster, Stronger
The Heterogeneous Impact of Market Size on Innovation
Are Price-Cost Markups Rising in the United States? A Discussion of the Evidence
Markups and misallocation with evidence from exchange rate shocks
Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity
Globalization, Markups, and US Welfare
Growth through Heterogeneous Innovations
Trade, Firm Selection and Innovation
Putting Ricardo to Work
| Citation velocity | historical |
|---|---|
| Highly cited | No |