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Trade, Markups, and Consumer Welfare: Evidence from the Global Smartphone Industry
2024-03-22
Time: 10:00 am- 11:30 am, Mar. 22nd, 2024
Speaker: Xiaochen Xie
(Renmin University of China)
Venue: 359s, Overseas Exchange Center, Peking University
Platform: Zoom
Meeting ID: 994 5991 6531
Passcode: inse
Abstract:
This study investigates how trade policies impact markups and consumer welfare. Elevated trade barriers affect markups via cost and competition mechanisms. Less competitive markets lead to markup increases (competition), while higher delivery costs cause imported goods to raise prices less than the cost hike to counter demand decline, reducing markups (cost). Utilizing data from the smartphone markets of 40 major countries, we build a supply and demand model where both firms' product portfolios and pricing strategies are endogenous. Our counterfactual analysis indicates that the tariff effect on markups depends on imported goods share. Furthermore, cost, more than competition, significantly shapes the markup change. Finally, we highlight the importance of considering trade policy-induced markup alterations on welfare, challenging constant markup assumptions in canonical models.
Speaker:
Xiaochen Xie, Assistant Professor at the School of Finance, Renmin University of China, holds a Ph.D. in Economics from Pennsylvania State University. His primary research areas include public finance, international trade, industrial organization, and urban and regional economics. Professor Xie employs empirical regression analysis and structural model simulations to evaluate the impact of government policies and public projects on firm behavior and the macroeconomy.