This paper presents theory and evidence from Chinese firm-product data that, given firm productivity, trade liberalization increases product markups. This finding calls for a reconsideration of the well-established imports-as-market-discipline hypothesis. This paper further verifies underlying...

This paper presents theory and evidence from Chinese firm-product data that, given productivity, trade liberalization via input tariff reductions induces an incumbent importer/exporter to increase product markups. This finding calls for a reconsideration of the well-established...