Advanced

On the Link Between Innovation, Markups and Exporting

Jägerstedt, Hannes LU (2016) NEKN01 20161
Department of Economics
Abstract
The relationship between innovation, markup and exporting is complex and any empirical analysis is likely to contain both self-selection and simultaneity biases. I use recently developed GMM estimation techniques to recover time-varying markups at the firm level. I then cast these into a simultaneous-equation framework to estimate the influence of R\&D investments on markups and export behavior of Swedish manufacturing firms. My analysis shows that firms can significantly improve their domestic market power through innovative investments. Moreover, a one percentage point increase in the markup gives rise to a 0.013 per cent export surge per employee on average. This confirms the hypothesis that, through innovation, firms establish domestic... (More)
The relationship between innovation, markup and exporting is complex and any empirical analysis is likely to contain both self-selection and simultaneity biases. I use recently developed GMM estimation techniques to recover time-varying markups at the firm level. I then cast these into a simultaneous-equation framework to estimate the influence of R\&D investments on markups and export behavior of Swedish manufacturing firms. My analysis shows that firms can significantly improve their domestic market power through innovative investments. Moreover, a one percentage point increase in the markup gives rise to a 0.013 per cent export surge per employee on average. This confirms the hypothesis that, through innovation, firms establish domestic market power before turning to foreign markets. (Less)
Please use this url to cite or link to this publication:
author
Jägerstedt, Hannes LU
supervisor
organization
course
NEKN01 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
Innovation, Markups, GMM, CDM, Quality Ladders
language
English
id
8889678
date added to LUP
2016-09-09 14:05:34
date last changed
2016-09-09 14:05:34
@misc{8889678,
  abstract     = {The relationship between innovation, markup and exporting is complex and any empirical analysis is likely to contain both self-selection and simultaneity biases. I use recently developed GMM estimation techniques to recover time-varying markups at the firm level. I then cast these into a simultaneous-equation framework to estimate the influence of R\&D investments on markups and export behavior of Swedish manufacturing firms. My analysis shows that firms can significantly improve their domestic market power through innovative investments. Moreover, a one percentage point increase in the markup gives rise to a 0.013 per cent export surge per employee on average. This confirms the hypothesis that, through innovation, firms establish domestic market power before turning to foreign markets.},
  author       = {Jägerstedt, Hannes},
  keyword      = {Innovation,Markups,GMM,CDM,Quality Ladders},
  language     = {eng},
  note         = {Student Paper},
  title        = {On the Link Between Innovation, Markups and Exporting},
  year         = {2016},
}