International Trade and Corporate Market Power

By Jesus R Gonzalez-Garcia, Yuanchen Yang

July 17, 2020

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Jesus R Gonzalez-Garcia, and Yuanchen Yang. International Trade and Corporate Market Power, (USA: International Monetary Fund, 2020) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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 agreggate 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 signficantly 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.

Subject: Imports, Structural reforms, Tariffs, Trade barriers, Trade liberalization

Keywords: Import penetration, Market power, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/131
Stock No:

WPIEA2020131
ISBN:

9781513550473
ISSN:

1018-5941

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