Market Size, Competition, and the Product Mix of Exporters
We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales toward its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within-firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large.
Year of publication: |
2014
|
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Authors: | Mayer, Thierry ; Melitz, Marc J. ; Ottaviano, Gianmarco I. P. |
Institutions: | Department of Economics, Harvard University |
Saved in:
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