The digital economy and markup: Based on herd behavior and peer effect

The relationship between digital economy and signal information on firms' markup has been overlooked and not well explained, especially in the emerging economies. When there is information asymmetry or too much information, the export decisions of firms are not completed independently, but the result of the comprehensive trade-off of the export signals issued by the 'neighbors'. This paper discusses the impact of the development of digital economy on the markup of export firms by distinguishing two perspectives of export signal, namely herd behavior and peer effect. We find that the digital economy has a positive impact on firm markup. There is substitution effect in digital economy and export signals, and digital economy acts price bonus by influencing export signals. The growing popularity of market signals could offset some of the advantages of the digital economy on export markup for companies. In addition, our paper finds that foreign-owned firms, large-scale firms, highly competitive industries and non-digital economy industries adjust their markups more significantly when they were affected by export signals.