The Research On The Trends And Influential Factors Of OECD Countries' Markups

For the past several decades,trade liberalization has became the most important part of the developing countries' strategies,since the excellent competition mechanism,specializing advantage sector and effective resource allocation derived from trade liberalization benefit the country itself.A lot of theoretical and empirical researches have done elaborate study for this topic.For instance,BEJK(2003)and Melitz&Ottaviano(2008)prove that the trade liberalization will bring markups to decrease.Decreasing trade barrier will benefit foreign high-quality firms entering domestic market and consequently,the competition among native market will become fierce which will force domestic firms to lower the product price.As a result,trade liberalization has a negative effect on markups(i.e.pro-competition effect).But is that true?Have markups really decrased?Does the pro-competition effect of trade exactly exist?Since the integrity and consistency of the data in EU KLEMS Database,we extract the data of 28 industries in 20 OECD countries to compute original markups from 1970 to 2007 for each industry.Then,we establish model to control price shocks and cycle impacts to obtain the structural markups.Following that,we analyze the trends of structural markups.Finally,we establish econometric models to analyze the influential factors on markups' trends.We can obtain four conclusions:Firstly,margins indeed have time-trends and not all margins among different industries are declining;Secondly,no matter among countries or among industries,markups are converging.Thirdly,import has significant negative effect on markups,while export has positive effect on markups;Fourthly,the import penetration dispersion has significant positive effect on markup dispersion.