torino 22 february 2007 cnr working group on international economics n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Torino, 22 February 2007 CNR Working Group on International Economics PowerPoint Presentation
Download Presentation
Torino, 22 February 2007 CNR Working Group on International Economics

Loading in 2 Seconds...

play fullscreen
1 / 10

Torino, 22 February 2007 CNR Working Group on International Economics - PowerPoint PPT Presentation


  • 120 Views
  • Uploaded on

Lucia Tajoli Discussion of the paper: Endogenous markups, international trade and the product mix by Carlo Altomonte and Alessandro Barattieri. Torino, 22 February 2007 CNR Working Group on International Economics. Two tasks of the paper.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Torino, 22 February 2007 CNR Working Group on International Economics' - kinsey


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
torino 22 february 2007 cnr working group on international economics

Lucia TajoliDiscussion of the paper:Endogenous markups, international trade and the product mixby Carlo Altomonte and Alessandro Barattieri

Torino, 22 February 2007

CNR Working Group on International Economics

two tasks of the paper
Two tasks of the paper
  • Estimates of the pro-competitive effect of imports on the markup of Italian firms
  • Interpretation of the unexpected results looking at firms’ responses to import competition

Lucia Tajoli

1 estimates of the effect of imports on markups
1) Estimates of the effect of imports on markups
  • Interesting exercise to show the pro-competitive effect of imports in Italy, often considered a comparatively close and protected market
  • Comparison with other countries?
  • Marginal effect of imports reduces markups in the aggregate but over time markups increase: is the market becoming less competitive?
  • Industry-level results: little heterogeneity? Ranking by industry is meaningful?
  • More discussion of the results needed

Lucia Tajoli

1 estimates of the effect of imports on markups1
1) Estimates of the effect of imports on markups
  • Existing evidence on Italian firms’ markups
    • Fabiani, Gattulli, Sabbatini, The pricing behaviour of Italian firms: new survey evidence on price stickiness, ECB Working Paper No. 333, April 2004
    • Marchetti, Markups and the Business Cycle: Evidence from Italian Manufacturing Branches, Open Economies Review, Vol.13, No.1, Jan. 2002
    • Bottasso, Galeotti, Sembenelli, The impact of financing constraints on markups: theory and evidence from Italian firm level data, Ceris-CNR Working paper 6/97, 1997

Lucia Tajoli

1 estimates of the effect of imports on markups methodology
1) Estimates of the effect of imports on markups: methodology
  • Same methodology as Konings and Vandenbussche JIE 2005
  • Some problematic assumptions
    • constant returns to scale: we know they exist, how to deal with them? Graph 2 not fully convincing
    • constant markups over the group of firms: very unrealistic, and destroying one of the sources of firms’ heterogeneity. Why working with firm level data then ?

Lucia Tajoli

constant markups
Constant markups?

Source: Fabiani et al. (2004)

Lucia Tajoli

2 firms responses to increased competitive pressure
2) Firms responses to increased competitive pressure
  • Facts to be explained: increase competitive pressure from imports together with increase in markups

(elsewhere seen as Italian loss of market share in volumes much stronger than in values)

  • A different route to explain this apparent paradox in terms of change (upgrade) of product mix (interesting no prices!)

Lucia Tajoli

2 firms responses to increased competitive pressure1
2) Firms responses to increased competitive pressure
  • Is there evidence of a change of the product mix?
    • St.dev. of product share distribution has serious problems with the classification
    • concentrated product mix (high specialization) could allow for very high markups
    • product mix heterogeneity may indicate larger firms?
  • Which are the possible alternative explanations? How are they checked for?

Lucia Tajoli

2 firms responses to increased competitive pressure alternatives to changes in the product mix
2) Firms responses to increased competitive pressure: alternatives to changes in the product mix
  • Increased concentration/larger firms
    • evidence ruling this out not fully convincing (sample strongly biased toward large firms, concentration in S group not moving linearly, very strong exit rate)
  • Re-organization of production, change in production techniques
    • e.g. with international fragmentation of production, increase in total imports does not imply an increase in competitive pressure, but quite the opposite

Lucia Tajoli

summing up
Summing up
  • interesting and relevant issue, much debated in Italy
  • use of a simple testable model
  • but high cost of some simplifications
  • more discussion needed for some of the empirical results
  • more testing of alternative interpretations of the results

Lucia Tajoli