Two-Sided Market Power in Firm-to-Firm Trade
Résumé
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%.
Domaines
Economies et finances
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2022_alviarez_fioretti_kikkawa_sauder_morlacco_two_sided_market_power_in_firm_to_firm_trade.pdf (1)
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