Trade, Productivity and Profits: On Profit levels and Profit margins
Tamminen, Saara; van den Berg, Marcel; van Marrewijk, Charles (2016-09-28)
Tamminen, Saara
van den Berg, Marcel
van Marrewijk, Charles
Valtion taloudellinen tutkimuskeskus VATT
28.09.2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2018042618934
https://urn.fi/URN:NBN:fi-fe2018042618934
Tiivistelmä
Do firms engaging in international trade have higher or lower profit margins? It is well-established that more productive firms engage in trading activities and as a result have higher profit levels. We use two theoretical models (the Melitz model and the Egger-Kreickemeier model) to clarify the relationship between productivity, trade activity, and profit margins and derive three hypotheses: (I) profit margins rise as productivity rises for domestic firms, (II) profit margins rise as productivity rises for trading firms, and (III) profit margins are not higher for trading firms than for domestic firms. We test these hypotheses using detailed micro-data for Finland (2005-2010) and the Netherlands (2002-2010). We find strong support for hypothesis I (in favour of the Melitz model), hypothesis II (in favour of both models), and hypothesis III (in favour of the Egger-Kreickemeier model). A propensity score matching analysis provides further support for hypothesis III.
Tutkimusteema
International comparisons, Kansainväliset vertailut
JEL
F140 - Empirical Studies of Trade, L250 - Firm Performance: Size, Age, Profit, and Sales
Avainsanat
profit margins, productivity, trade
Kokoelmat
- VATT Working Papers [163]