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Full-Text Articles in Industrial Organization
Competition, Markups, And Gains From Trade: A Quantitative Analysis Of China Between 1995 And 2004, Wen-Tai Hsu, Yi Lu, Guiying Laura Wu
Competition, Markups, And Gains From Trade: A Quantitative Analysis Of China Between 1995 And 2004, Wen-Tai Hsu, Yi Lu, Guiying Laura Wu
Research Collection School Of Economics
This paper provides a quantitative analysis of gains from trade in a model with head-to-head competition using Chinese firm-level data from Economic Censuses in 1995 and 2004. We find a significant reduction in trade cost during this period, and total gains from such improved openness during this period is 7:1%. The gains are decomposed into a Ricardian component and two pro-competitive ones. The procompetitive effects account for 20% of the total gains. Moreover, the total gains from trade are 13 31% larger than what would result from the formula provided by ACR (Arkolakis, Costinot, and Rodríguez-Clare 2012), which nests a …