Wednesday, March 11, 2026 11:00 - 12:00

SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH

About this event

Cost-based trade measures are increasingly used to reshape global trade. Their incidence and efficiency hinge on how exporters translate marginal cost changes into export prices. Using transaction-level data for Chinese exporters and exogenous movements in world input prices, this paper provides new evidence on input cost pass-through to export prices. Pass-through is incomplete and heterogeneous in percentage terms, but approximately linear and homogeneous in levels. A one RMB increase in marginal cost raises export prices by about 0.4 RMB across firms. Motivated by this evidence, we develop an open-economy model with variable markups and constant pass-through in levels. Firms optimally choose prices that are linear in marginal costs, yielding a tractable link between cost exposure and pricing decisions. The resulting demand system features variable elasticities and endogenous markups while remaining analytically transparent. In this environment, a broad class of non-discriminatory trade policies can reduce misallocation and raise global welfare, provided that exporters follow linear pricing. The framework thus offers a disciplined way to incorporate empirically relevant currency-unit pricing into quantitative trade and policy analysis.

Participants are expected to adhere to the CEP Events Code of Conduct.

Directions

This event will take place in SAL 1.04, 1st Floor Conference Room, Sir Arthur Lewis Building, LSE, 32 Lincoln's Inn Fields, London WC2A 3PH.

The building is labelled SAL on the LSE campus map. You can also find us on Google Maps. For further information, go to contact us.

International Economics Workshops are part of the CEP's Trade programme.