Digital Product Imports and Markups: Evidence From Chinese Multi‐Product Exporters

Abstract

ABSTRACT This paper examines the impact of digital product imports on multi‐product markups. Using Chinese micro enterprise data, we find that digital product imports significantly enhance multi‐product markups, and the extent of the positive effect on the markups varies according to product ranking. Compared with non‐core products, digital product imports have a more pronounced promoting effect on the markups of core products. Exploring possible mechanisms, we find that digital product imports help reduce marginal cost and promote quality upgrading, thereby increasing multi‐product markups. The promoting effect of digital product imports is particularly evident among firms in high robot penetration industries, firms in high‐technology industries and non‐state‐owned firms. This study provides novel evidence on the effects of digital product imports on the competitive advantage of foreign trade.