{"title":"Chinese Import Competition and Prices: Evidence from India*","authors":"Pavel Chakraborty, Michael Henry, Rahul Singh","doi":"10.1111/obes.12632","DOIUrl":null,"url":null,"abstract":"<p>How do output prices respond to trade shocks? Using detailed firm-product level data on sales and quantity between 1996 and 2007, we study the causal effect of Chinese import competition on prices for Indian manufacturing firms. We find that Chinese import competition induces a significant decline in firm-product prices. A 1 percentage point increase in the Chinese import penetration ratio reduces firm-product prices by 3.5%. Further, this decline in prices is driven by a decline in markup, conditional on costs, as opposed to the pass through of cost savings to prices – providing evidence for <i>pro-competitive effect</i>. This decline in prices and markup is less pronounced for firms owned by Business Groups compared to stand-alone, privately owned firms. We also document a large decrease in marginal costs and an increase in markup with no significant effect on prices for firms on account of increased access to imported Chinese inputs.</p>","PeriodicalId":1,"journal":{"name":"Accounts of Chemical Research","volume":"86 6","pages":"1484-1510"},"PeriodicalIF":16.4000,"publicationDate":"2024-07-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Accounts of Chemical Research","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/obes.12632","RegionNum":1,"RegionCategory":"化学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"CHEMISTRY, MULTIDISCIPLINARY","Score":null,"Total":0}
引用次数: 0
Abstract
How do output prices respond to trade shocks? Using detailed firm-product level data on sales and quantity between 1996 and 2007, we study the causal effect of Chinese import competition on prices for Indian manufacturing firms. We find that Chinese import competition induces a significant decline in firm-product prices. A 1 percentage point increase in the Chinese import penetration ratio reduces firm-product prices by 3.5%. Further, this decline in prices is driven by a decline in markup, conditional on costs, as opposed to the pass through of cost savings to prices – providing evidence for pro-competitive effect. This decline in prices and markup is less pronounced for firms owned by Business Groups compared to stand-alone, privately owned firms. We also document a large decrease in marginal costs and an increase in markup with no significant effect on prices for firms on account of increased access to imported Chinese inputs.
期刊介绍：
Accounts of Chemical Research presents short, concise and critical articles offering easy-to-read overviews of basic research and applications in all areas of chemistry and biochemistry. These short reviews focus on research from the author’s own laboratory and are designed to teach the reader about a research project. In addition, Accounts of Chemical Research publishes commentaries that give an informed opinion on a current research problem. Special Issues online are devoted to a single topic of unusual activity and significance.
Accounts of Chemical Research replaces the traditional article abstract with an article "Conspectus." These entries synopsize the research affording the reader a closer look at the content and significance of an article. Through this provision of a more detailed description of the article contents, the Conspectus enhances the article's discoverability by search engines and the exposure for the research.
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