Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/327656 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12046
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
This paper derives a closed-form expression linking aggregate markups on imported inputs to concentration in a model of firm-to-firm trade with two-sided market power. Our theory extends standard oligopoly insights in two dimensions. First, it reveals that markups increase with exporter concentration and decrease with importer concentration, reflecting the balance of oligopoly and oligopsony forces. Second, it adapts conventional market definitions to reflect rigid trading relationships, yielding new concentration measures that capture competition in firm-to-firm trade. Analysis of Colombian transaction-level import data shows these differences are key to understanding markup dynamics in international trade.
Subjects: 
concentration
markups
market power
pricing
trade network
JEL: 
L11
L13
F13
Document Type: 
Working Paper
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