The Discussion Papers series presents results from ongoing research projects and other research and analysis by SSB staff, intended for international journals or books. The views and conclusions in this document are those of the author(s).
We propose a heteroskedasticitybased estimator that relaxes this restriction by applying the Frisch Waugh-Lovell theorem to partial out rival price and quantity aggregates, jointly identifying the export price elasticity and the strategic complementarity elasticity within a GMM estimation framework. The estimator requires no quasiexperimental variation and no data beyond standard bilateral trade flows and exchange rates. Applying the method to Norwegian manufacturing exports over 1999–2024, we estimate an export price elasticity of 4.42 (standard error of 0.72) and a strategic complementarity elasticity of 0.51 (standard error of 0.15). The significant positive complementarity estimate rejects the constant markup restriction imposed by standard estimators.