HK Online Trade Seminar Series – “Two-Sided Market Power in Firm-to-Firm Trade” by Dr. Ayumu Ken Kikkawa
Dr. Ayumu Ken Kikkawa
Sauder School of Business
University of British Columbia
We provide a framework for analyzing buyer-supplier bargaining over the price of an imported good with two-sided market power and heterogeneity. Our main theoretical result is a price formula that tractably nests a wide range of configurations of market power and heterogeneity among importers and exporters in a unified way. We demonstrate that a shock to the exporter’s costs can have a very different pass-through on import prices depending on the allocation of bargaining power and bilateral market shares. To estimate the model, we build a novel dataset merging transaction-level international trade data for the U.S. with balance sheet information on both the U.S. importers and foreign exporters. Our results shed light on two open questions on firms’ participation in global value chains: the relationship between import and export concentration and markups; the role of firms in determining the tariff pass-through on import prices.
This is a joint seminar organized by HKU, CUHK, City U, HKUST and Lingnan U.
Please contact Xiameng PAN at email@example.com for registration.