Wine, markups, and export behavior : evidence from Hungary

Abstract

The study examines the influence of markups on the export decisions and subsequent export intensity of firms within the Hungarian wine sector. Additionally, we evaluate the impact of entering and sustaining a presence in export markets on firms’ markups and compare the markup levels between exporting and non-exporting firms. We find that markups have a positive impact on both the probability of exporting and the export intensity, which aligns with previous findings. We demonstrate that exporting leads to an increase in markups. We find that exporters maintain higher markups even when accounting for productivity differences. Additionally, exporting can lead to higher markups because of the learning-by-exporting phenomenon. The results have significant implications. The findings imply that markups have a significant impact on the decision-making process and performance of Hungarian wine exports. Policymakers should facilitate to increase the markups of firms in order to enhance the export of wine and promote economic growth. Wine exporting firms should enhance their productivity and implement strategic pricing strategies to increase their markups and expand their exports.