Country size matters in determining the effectiveness of domestic and foreign competition on pricing behavior in manufacturing. Removing barriers to entry of new firms reduces markups more in large countries, while removing barriers to imports reduces markups more in small countries

Average most-favored-nation tariffs in the "Quad" (Canada, the European Union, Japan, and the United States) have fallen to about 5 percent. But tariffs more than three times the average most-favored-nation duty are not uncommon in the Quad and have a disproportionate effect on exports of least...