Vanessa Alviarez: Concentration and Markups in International Trade

The Moynihan Institute’s program for Trade, Development and Political Economy program presents a talk by Vanessa Alviarez.

We study the relationship between industry concentration and aggregate markups in a model of firm-to-firm trade with two-sided market power. The theory shows that the aggregate markup in an input market is a linear function of two concentration measures: it increases with concentration among suppliers and decreases with concentration among buyers. We use Colombian import data from 2009-2020 to analyze trends in import and export concentration during the sample period and the corresponding evolution of aggregate markups.

Our analysis shows that considering two-sided concentration and market power yields a more comprehensive understanding of the evolution of aggregate markups in international trade compared to standard models where supplier concentration is the only relevant statistic.

Vanessa Alviarez is a lead economist at the Research Department of the Inter-American Development Bank (IDB). Previously, she was an assistant professor at the Sauder School of Business at the University of British Columbia. She received an M.A. and Ph.D. in economics from the University of Michigan.

Her research focuses on international economics, looking at how the location and sourcing decisions of multinationals affect employment, trade patterns, and firms’ performance. She also studies how a firm’s foreign network of suppliers and buyers can affect markups and prices.