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Two-Sided Market Power in Firm-to-Firm Trade

Michele Fioretti
Vanessa Alvariez
  • Function : Author
  • PersonId : 1170016
Ayumu Ken Kikkawa
  • Function : Author
  • PersonId : 1170017
Monica Morlacco
  • Function : Author
  • PersonId : 1170018

Abstract

Global value chains (GVCs) typically involve large firms exerting bargaining power over the terms of trade. We develop a novel theory of international prices accounting for these features of GVCs and illustrate their e↵ect on the pass-through of trade shocks into import prices. We build a new dataset merging transaction-level U.S. import data with balance sheet data for both importers and exporters to evaluate the model's performance. Our estimated model generates more accurate predictions of pair-level price changes following trade shocks than standard models, improving the estimated impact of the 2018 trade war on aggregate U.S. import prices by 40-60%.
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Dates and versions

hal-03795736 , version 1 (04-10-2022)

Licence

Attribution - NonCommercial - NoDerivatives - CC BY 4.0

Identifiers

  • HAL Id : hal-03795736 , version 1

Cite

Michele Fioretti, Vanessa Alvariez, Ayumu Ken Kikkawa, Monica Morlacco. Two-Sided Market Power in Firm-to-Firm Trade. 2022. ⟨hal-03795736⟩
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