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Documentos de Economía Y Finanzas Internacionales Working Papers on International Economics and Finance
DOCUMENTOS DE ECONOMÍA Y FINANZAS INTERNACIONALES Working Papers on International Economics and Finance
DEFI 10-05
September 2010

Markups, bargaining and offshoring: An empirical assessment

Lourdes Moreno Diego Rodríguez

Asociación Española de Economía y Finanzas Internacionales www.aeefi.com ISSN: 1696-6376

MARKUPS, BARGAINING POWER AND OFFSHORING: AN EMPIRICAL ASSESSMENT
Lourdes Moreno* Diego Rodríguez*

Abstract This paper tests the pro-competitive effect of imports on product and labour markets for Spanish manufacturing firms in the period 1990-2005. In doing so, it takes into account the type of imported products: final vs intermediate. Markups are estimated following the procedure suggested by Roeger (1995) and including an efficient bargaining model. The observed heterogeneity among firms is parameterized to consider additional product standardization and market concentration. The results support the Imports as Market Discipline hypothesis for importers of final goods, while firms that offshore intermediate inputs show similar markups to non-importers. Additionally, the union bargaining power is smaller the more final-goods oriented imports are and the more homogeneous is the type of goods elaborated by firms.

Keywords: Markups, offshoring, bargaining power. JEL Classification: F12, L60, L13.

Corresponding author: Lourdes Moreno Martín, Departamento de Fundamentos de Análisis Económico I, Facultad de Ciencias Económicas y Empresariales, Campus de Somosaguas, 28223 Madrid. E-mail: lmoreno@ccee.ucm.es

* Universidad Complutense de Madrid and GRIPICO Acknowledgements: The authors benefited from presentations at the Tenth Annual Conference of the ETSG (Warsaw), Simposio de Análisis Económico (Zaragoza), Jornadas de Economía Internacional (Barcelona) and Aachen Workshop on International Production (Aachen), and especially from suggestions by Holger Görg and Johannes van Biesebroeck. We acknowledge financial support from the Spanish



References: 24 Estrada, A (2009): “The markups in the Spanish Economy: International comparison and recent evolution”, DT 0905 Banco de España 17749 (2519) 0,150 0.168 17749 (2519) 0,150 0.168 17749 (2519) AMRit refers to the industry average of the import ratio

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