Highlights :

• We estimate firm-level markups and test some micro-level predictions of a model of international trade with heterogeneous firms and endogenous markups.
• We use a theoretical framework extended Melitz and Ottaviano (2008) model that features both quality and spatial differentiation across firms.
• We draw a map of markup distribution and export participation in France.
• We find that firm markups are positively related to firm productivity and negatively related to the toughness of local competition.
• We find evidence that markups are higher for exporters, what appears to indicate that the quality-enhancing channel overbalances the price-depressing channel of global competition.

 Abstract :
In this paper, we estimate firm-level markups and test some micro-level predictions of a model of international trade with heterogeneous firms and endogenous markups. Our theoretical framework is an extended version of the Melitz and Ottaviano (2008) (MO) model that features both quality and spatial differentiation across firms. In line with our model, we find that firm markups are positively related to firm productivity and negatively related to the toughness of local competition. Considering the relationship between firm markups and exports, we find evidence that markups are higher for exporters, what appears to indicate that the quality-enhancing channel overbalances the price-depressing channel of global competition.

 Keywords : Mark-ups | International Trade | Productivity

 JEL : f14, D24