A Study On The Effect Of Service Liberalization On Export Firms’ Markup And Markup Dispersion

After entering the WTO in 2001,China’s foreign trade has developed rapidly,and its status as a major trading country has become increasingly stable.In contrast,China’s trade volume is "big but not strong".Its essence is due to the weak market power of export enterprises and the low efficiency of resource allocation.Firms’ markup is an important index to measure the performance of export firms.Its size reflects the profitability and market monopoly position of export firms,and markup dispersion reflects the efficiency of resource allocation in the industry.The opening of the service industry is the core goal of my country’s opening to the outside world.Therefore,taking the markup of export enterprises and their dispersion as the starting point,and discussing the influence of service liberalization on the markup and markup dispersion of export firms is a key topic that needs to be studied urgently in the new era.At the same time,Global international economic and trade relations are facing restructuring.The Sixth Plenary Session of the 19 th Central Committee of the Communist Party of China pointed out that it is necessary to implement a wider field,a larger scope and a higher level of opening up.Service liberalization has become the core goal of building an open new economy in the new era.Therefore,studying the impact of service liberalization on the markup and its dispersion of export firms will not only help clarify the source of the improvement of export firms’ profitability,promote the high-quality development of export firms,but also help evaluate the micro-impact of liberalization policies for trade in service,and provide experience support for further expanding the opening up of the service industry.Firstly,this paper studies the influence and mechanism of service liberalization on the markup and markup dispersion of export firms under the framework of heterogeneous firm trade theory.In the extended MO model,the service factor production sector is introduced innovatively to study the influence of service liberalization on the markup and markup dispersion of export firms.After that,the MO model is expanded vertically by adding product quality factors to study the mechanism of how service liberalization affects the markup of export firms.Theoretical research mainly found that: the liberalization of service trade has a positive impact on the markup of export firms,while the liberalization of service trade and the dispersion of the markup of export firms have a "U-shaped" relationship,and the liberalization of service trade mainly promotes the markup of export firms through four channels: improving productivity,improving the quality of export products,easing financing constraints and strengthening the division of labor among firms.Then,this paper mainly uses the matching samples of China’s industrial enterprise database and customs database from 2001 to 2013 to test the theoretical proposition.The research conclusions are as follows:First,the service liberalization has significantly increased the markup of export firms.This conclusion is still valid after a series of robustness tests,such as the instrumental variable method,the calculation method of replacing the core variable,and the change of the sample period.Heterogeneity analysis shows that the service liberalization increases the markup of capital-intensive,technology-intensive,non-monopoly and eastern export firms.The mechanism analysis shows that the service liberalization mainly affects the markup of export firms through "productivity effect","quality upgrade effect","financing constraint effect" and "production segmentation effect".Second,the impact of service liberalization on the markup dispersion of export firms has an obvious positive "U-shaped" relationship,that is,there is a certain threshold for service liberalization.When it is lower than the threshold,service liberalization will optimize the efficiency of resource allocation,while when it is higher than the threshold,service liberalization will worsen the efficiency of resource allocation.Heterogeneity analysis shows that the service liberalization has significantly improved the resource allocation efficiency of technology-intensive industries,industries in low global value chains,and industries with a high proportion of state-owned enterprises.Further subdivision of the opening of the service sector shows that the opening of the financial service industry optimizes the efficiency of resource allocation,while the opening of the communication service industry deteriorates it.The mechanism analysis shows that service liberalization mainly affects the efficiency of resource allocation through two major channels: price dispersion and marginal cost dispersion,intensive margin and extensive margin.Third,in addition to conventional empirical research,this paper also innovatively uses quantitative analysis methods to analyze the impact of raising service trade barriers on the markup of export firms under the bilateral relationship.Based on MO model,the behavior of importing service products and intermediate products of export firms was introduced,and the relevant parameters were calibrated by using the trade data of China and the United States.it is found that whether China or the United States unilaterally raise barriers to trade in services will worsen the country’s export firms’ markup.Under the bilateral relationship,China and the United States raise service trade barriers at the same time will significantly reduce the markup of export firms,and have a greater negative impact on Chinese export firms.In addition,raising service trade barriers will significantly reduce a country’s social welfare level.Finally,based on the above research conclusions,this paper puts forward policy suggestions such as continuing to expand the level of service trade liberalization,improving the construction of the service industry’s opening-up system,and promoting the transformation and upgrading of processing trade.Compared with the existing research,the innovation of this paper is as follows: From the perspective of research,this paper innovatively studies its influence on the markup and markup dispersion of export firms from the perspective of service trade liberalization.In the theoretical research,this paper innovatively introduces the service factor production sector into the MO model,and deduces the influence of service trade liberalization on the markup and its dispersion of export firms from the perspective of theoretical modeling.In terms of research methods,this paper innovatively uses the instrumental variable method to solve potential endogenous problems,and uses the quantitative analysis method of numerical simulation to more accurately evaluate the policy effect of service liberalization.