Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129856
Authors: 
Muraközy, Balázs
Russ, Katheryn Niles
Year of Publication: 
2015
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2015/34
Abstract: 
Do multinational firms wield more market power than their domestic counterparts? Using Hungarian firm-level data between 1993 and 2007, we find that markups are 19 percent higher for foreign-owned firms than for domestically owned firms. Moreover, markups for domestically owned firms are significantly lower in industries where multinationals have a greater technological edge, suggesting that Ricardian differences in technology and endogenous markups constitute important dimensions for models of foreign direct investment. We innovate within a canonical Ricardian model of endogenous markups and heterogeneous firms to provide analytical distributions of market shares and markups when goods are imperfect substitutes to provide structure for our empirical analysis. Our model explains about half of the multinational markup premium identified in the empirical analysis.
Subjects: 
multinational firm
heterogeneous firms
Bertrand competition
multinational firm
heterogeneous firms
Bertrand competition
JEL: 
F12
F13
F15
F23
ISBN: 
978-615-5447-96-9
Document Type: 
Working Paper

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