Business, Government & the International Economy

- September 2024
- Case
Burn the Gondolas? Venice, the Ghetto, and the Seasons of Capitalism

By: Sophus A. Reinert, Charlotte Robertson and Robert Fredona
- September 2024
- Case
Burn the Gondolas? Venice, the Ghetto, and the Seasons of Capitalism

By: Sophus A. Reinert, Charlotte Robertson and Robert Fredona
- 2024
- Working Paper
Markups and Cost Pass-through Along the Supply Chain

By: Santiago E. Alvarez, Alberto Cavallo, Alexander MacKay and Paolo Mengano

We study markups and pricing strategies along the supply chain. Our unique dataset combines detailed price and cost information from a large global manufacturer with matched retail prices collected online for the period July 2018 through June 2023. We show that total markups—reflecting the difference between retail prices and production costs—are stable over time, despite the inflationary period at the end of the sample. Along the supply chain, manufacturer and retail markups are negatively correlated. For the most part, we find similar patterns across countries, though there is substantial heterogeneity in the split of markups between the manufacturer and retailers. Our analysis also reveals divergent pricing behaviors in response to cost shocks. The manufacturer adjusts prices more quickly than retailers and appears to more fully incorporate idiosyncratic cost shocks to specific products. Both types of firms respond more quickly to expected costs than to unexpected costs.
- 2024
- Working Paper
Markups and Cost Pass-through Along the Supply Chain

By: Santiago E. Alvarez, Alberto Cavallo, Alexander MacKay and Paolo Mengano

We study markups and pricing strategies along the supply chain. Our unique dataset combines detailed price and cost information from a large global manufacturer with matched retail prices collected online for the period July 2018 through June 2023. We show that total markups—reflecting the difference between retail prices and production costs—are...
- 2024
- Working Paper
The Consequences of Export Controls in Target Countries

By: Xueyue Liu, Yu Liu and Jaya Y. Wen

Export controls are a common instrument of national security, but their economic consequences are not well understood. This paper evaluates how these controls affect firm performance and adaptation in targeted countries. We use variation in a 2007 US policy, commonly called the “China Rule”, that restricted Chinese imports of products with military end-uses. We find a substantial, persistent decrease in Chinese imports of these products from the United States, which are not replaced by imports from the rest of the world. Exposed firms exhibit decreased profits and productivity. Furthermore, exposed firms show signs of adaptation: they are more likely to have positive R&D expenditures and more likely to hold any patent. However, firms do not appear to adapt by substituting to other import partners.
- 2024
- Working Paper
The Consequences of Export Controls in Target Countries

By: Xueyue Liu, Yu Liu and Jaya Y. Wen

Export controls are a common instrument of national security, but their economic consequences are not well understood. This paper evaluates how these controls affect firm performance and adaptation in targeted countries. We use variation in a 2007 US policy, commonly called the “China Rule”, that restricted Chinese imports of products with...

About the Unit

The BGIE Unit conducts research on, and teaches about, the economic, political, social, and legal environment in which business operates. The Unit includes scholars trained in economics, political science, and history; in its work, it draws on perspectives from all three of these disciplines.

The following demonstrates one way of classifying the approaches the Unit takes to learning and teaching.

The Unit examines the “rules” and policies established by government and other non-business institutions that affect business in the United States.
The Unit turns to history to understand the origins of today’s business environment as well as some of the alternatives that have emerged from time to time.
The Unit examines other countries’ business environments and their historical development.
The BGIE group is deeply interested in the impact of globalization and the way rules are emerging to govern international economic transactions as globalization proceeds.

Recent Publications

Burn the Gondolas? Venice, the Ghetto, and the Seasons of Capitalism

By: Sophus A. Reinert, Charlotte Robertson and Robert Fredona

September 2024 |
Case |
Faculty Research

Citation

Educators

Markups and Cost Pass-through Along the Supply Chain

By: Santiago E. Alvarez, Alberto Cavallo, Alexander MacKay and Paolo Mengano

2024 |
Working Paper |
Faculty Research

We study markups and pricing strategies along the supply chain. Our unique dataset combines detailed price and cost information from a large global manufacturer with matched retail prices collected online for the period July 2018 through June 2023. We show that total markups—reflecting the difference between retail prices and production costs—are stable over time, despite the inflationary period at the end of the sample. Along the supply chain, manufacturer and retail markups are negatively correlated. For the most part, we find similar patterns across countries, though there is substantial heterogeneity in the split of markups between the manufacturer and retailers. Our analysis also reveals divergent pricing behaviors in response to cost shocks. The manufacturer adjusts prices more quickly than retailers and appears to more fully incorporate idiosyncratic cost shocks to specific products. Both types of firms respond more quickly to expected costs than to unexpected costs.

Keywords: Markups; Pricing; Price; Supply Chain; Inflation and Deflation; Cost

Citation

Read Now

Carlsberg: Creating a Buzz in Uzbekistan

By: Sophus A. Reinert, Akanksha Justin and Eric Justin

September 2024 |
Case |
Faculty Research

Citation

Educators

Iceland: "A Model to the World"

By: Sophus A. Reinert

September 2024 |
Case |
Faculty Research

Citation

Educators

The Consequences of Export Controls in Target Countries

By: Xueyue Liu, Yu Liu and Jaya Y. Wen

2024 |
Working Paper |
Faculty Research

Export controls are a common instrument of national security, but their economic consequences are not well understood. This paper evaluates how these controls affect firm performance and adaptation in targeted countries. We use variation in a 2007 US policy, commonly called the “China Rule”, that restricted Chinese imports of products with military end-uses. We find a substantial, persistent decrease in Chinese imports of these products from the United States, which are not replaced by imports from the rest of the world. Exposed firms exhibit decreased profits and productivity. Furthermore, exposed firms show signs of adaptation: they are more likely to have positive R&D expenditures and more likely to hold any patent. However, firms do not appear to adapt by substituting to other import partners.

Keywords: National Security; Trade; Business and Government Relations; Policy; Performance Productivity; Adaptation

Citation

Read Now