Multiproduct Firms, Export Product Scope, and Trade Liberalization PDF Download
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Author: Larry D. Qiu
Publisher:
ISBN:
Category :
Languages : en
Pages : 53
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Book Description
This paper provides a theoretical and empirical analysis of the effects of one-sided tariff cuts on firms' export product scope. The theoretical model explicitly incorporates cost of management in addition to the commonly used production cost. Firms are heterogeneous in terms of managerial efficiency but homogenous in terms of production productivity. The analysis predicts that the home country's tariff cut reduces all home firms' export product scope, whereas in response to the foreign country's tariff cut, a home firm's export product scope expands (shrinks) if the firm's management cost is low (high). These predictions are supported by our empirical analysis based on data on Chinese firms from 2000 to 2006.
Author: Larry D. Qiu
Publisher:
ISBN:
Category :
Languages : en
Pages : 53
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Book Description
This paper provides a theoretical and empirical analysis of the effects of one-sided tariff cuts on firms' export product scope. The theoretical model explicitly incorporates cost of management in addition to the commonly used production cost. Firms are heterogeneous in terms of managerial efficiency but homogenous in terms of production productivity. The analysis predicts that the home country's tariff cut reduces all home firms' export product scope, whereas in response to the foreign country's tariff cut, a home firm's export product scope expands (shrinks) if the firm's management cost is low (high). These predictions are supported by our empirical analysis based on data on Chinese firms from 2000 to 2006.
Author: Andrew B. Bernard
Publisher:
ISBN:
Category : Free trade
Languages : en
Pages : 66
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Book Description
This paper develops a general equilibrium model of multi-product firms and analyzes their behavior during trade liberalization. Firm productivity in a given product is modeled as a combination of firm-level "ability" and firm-product-level "expertise", both of which are stochastic and unknown prior to the firm's payment of a sunk cost of entry. Higher firm-level ability raises a firm's productivity across all products, which induces a positive correlation between a firm's intensive (output per product) and extensive (number of products) margins. Trade liberalization fosters productivity growth within and across firms and in aggregate by inducing firms to shed marginally productive products and forcing the lowest-productivity firms to exit. Though exporters produce a smaller range of products after liberalization, they increase the share of products sold abroad as well as exports per product. All of these adjustments are shown to be relatively more pronounced in countries' comparative advantage industries.
Author: Hong Ma
Publisher:
ISBN:
Category :
Languages : en
Pages : 300
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Book Description
Author: Van Pham
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Author: Rikard Forslid
Publisher:
ISBN:
Category : Economic geography
Languages : en
Pages : 24
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Book Description
In this paper we study how trade liberalization affects the location and the product scope of firms. We find that the largest and most productive multiproduct firms concentrate to the larger market as a result of trade liberalization. In the presence of relocation costs, we also find that these firms will expand their product range in the larger market while firms in the smaller market will contract their product scope. These effects are magnified with firm-level productivity. The findings are consistent with Japanese manufacturing firm data.
Author: John Lopresti
Publisher:
ISBN:
Category :
Languages : en
Pages : 53
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Book Description
A recent theoretical literature has emphasized the importance of multiproduct firms in trade. However, models within this literature have reached contradictory conclusions regarding the product-level response of firms to changes in trade costs. This paper attempts to resolve these contradictions by employing Bayesian techniques to estimate the product portfolio response throughout the distribution of U.S. firms following the Canada-US Free Trade Agreement of 1989. I find evidence of a differential response among firms that are heterogeneous in terms of their involvement in foreign markets. Firms with less than 10-20 percent of total sales accounted for by foreign markets reduced product diversification as trade costs fell, while more foreign-oriented firms increased diversification.
Author: Parisa Kamali
Publisher: International Monetary Fund
ISBN: 1513519875
Category : Business & Economics
Languages : en
Pages : 58
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Book Description
In many countries, a sizable share of international trade is carried out by intermediaries. While large firms tend to export to foreign markets directly, smaller firms typically export via intermediaries (indirect exporting). I document a set of facts that characterize the dynamic nature of indirect exporting using firm-level data from Vietnam and develop a dynamic trade model with both direct and indirect exporting modes and customer accumulation. The model is calibrated to match the dynamic moments of the data. The calibration yields fixed costs of indirect exporting that are less than a third of those of direct exporting, the variable costs of indirect exporting are twice higher, and demand for the indirectly exported products grows more slowly. Decomposing the gains from indirect and direct exporting, I find that 18 percent of the gains from trade in Vietnam are generated by indirect exporters. Finally, I demonstrate that a dynamic model that excludes the indirect exporting channel will overstate the welfare gains associated with trade liberalization by a factor of two.
Author: Yifan Li
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
"This thesis investigates the impacts of changes in the trading environment on the behavior and performance of exportingfirms and of firms that import intermediate inputs. The thesis consists of three essays. Each essay contributesboth a theoretical development and an empirical analysis, using large scaled micro data from multiple sources. Thefirst essay studies how increased import penetration of inputs affects firms’ optimal mark-up and industry concentration.A theoretical model is developed to show how firms, operating under monopolistic competition, may choose toincur a fixed cost of foreign sourcing in order to replace some domestically sourced input with more efficient foreignsubstitutes. It is shown that changes in variable trade costs not only affect firms’ importing decision but also thenumber and identity of firms in the market and ultimately markups and market structure. We find evidence of a positiverelationship between imported input penetration and markup: the average markup rises when import penetrationincreases following a reduction in trade costs. The second essay develops a two-stage theoretical model to investigatehow firms’ decision on the number of varieties to export (i.e., their export scope) depends on exchange rate volatilityand on other characteristics of the destination countries. In the model, in the first stage, multi-product firms decide ontheir optimal product scope (the number of varieties to be produced for exporting), incurring fixed investment costs.In the second stage, they decide on the export scope for each destination country, based on country-specific tradecosts and expectation of idiosyncratic exchange rate shocks. Firms reduce their export scope to destination countriesthat suffer negative demand shocks, but they cannot increase their export scope beyond the production scope that theyhave chosen in the first stage. Using Chinese customs transaction data, we are able to provide empirical evidence thatsupports the predictions of our theoretical model. The third essay studies the effect of foreign tariff reductions on the adjustment of average quality and export scope of multi-product exporting firms, using China’s firm-level microdata and highly disaggregated customs data from 2000 to 2006. We find that in response to tariff cuts in destinationcountries, exporting firms upgrade product quality and adjust export scope. Our finding provides a novel explanationof what the phenomenon called incomplete tariff pass-through. A fall in the tariff rate seems to be associated with anincrease in the tariff-inclusive prices, but this is because the price data has not been adjusted to reflect the increase inproduct quality"--
Author: Ha Thi Thanh Doan
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Utilizing firm-level data during 2010-2015, we examine the frequency and characteristics of multi-product firms in Vietnamese manufacturing. Our major findings are as follows. First, multi-product firms are larger, more capital-intensive, more productive, and are more likely to export. Second, multi-product firms are active in the market. Approximately 60% of firms adjust their product scope within a 6-year period. Third, the contribution of firms' product extensive margin to aggregate output growth is limited due to the prevalence of product dropping, which offsets the positive impact of product adding. Much of output growth during the period is thus generated by the intensive margin. Turning to the link between tariff reduction and product shedding, we do not detect any significant impact. However, we find that exporters play an important role in product adding, which suggests that they may contribute to aggregate growth through the channeling of product scope expansion. Contrary to our expectations, our analysis offers limited support for the heterogeneity of product turnover across ownership types. While we find that state-owned enterprises are more likely to spread economic activities across products and industries, there is little difference in terms of product churning among foreign direct investment, state-owned enterprises, and the domestic private sector.
Author: Kalina Manova
Publisher:
ISBN:
Category : Exports
Languages : en
Pages : 45
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Book Description
We examine the global operations of multi-product firms. We present a flexible heterogeneous-firm trade model with either limited or strong scope for quality differentiation. Using customs data for China during 2002-2006, we empirically establish that firms allocate activity across products in line with a product hierarchy based on quality. Firms vary output quality across their products by using inputs of different quality levels. Their core competence is in varieties of superior quality that command higher prices but nevertheless generate higher sales. In markets where they offer fewer products, firms concentrate on their core varieties by dropping low-quality peripheral goods on the extensive margin and by shifting sales towards top-quality products on the intensive margin. The product quality ladder also governs firms' export dynamics, both in general and in response to the exogenous removal of MFA quotas on textiles and apparel. Our results inform the drivers and measurement of firm performance, the effects of trade reforms, and the design of development policies.
