Export scope, managerial efficiency, and trade liberalization: Evidence from Chinese firms

Larry D. QIU*, Miaojie YU

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

Abstract

This paper presents a theoretical and empirical analysis of the effects of market competition and market expansion on firms’ product line decisions. The theoretical model explicitly incorporates cost of management and firm heterogeneity in terms of managerial efficiency. Both the theoretical and empirical analyses show that the home country’s final-goods tariff cut (which captures market competition) reduces all home firms’ export product lines, while in response to a foreign country’s tariff cut (which represents market expansion), those firms with high (low) managerial efficiency expand (reduce) their export product lines. Our empirical analysis is based on data on Chinese firms from 2000 to 2006. The findings are robust to many specifications of the empirical model.
Original languageEnglish
Pages (from-to)71-90
Number of pages20
JournalJournal of Economic Behavior and Organization
Volume177
Early online date29 Jun 2020
DOIs
Publication statusPublished - Sep 2020

Bibliographical note

We thank Pol Antràs, Cheng Chen, Kim-Sau Chung, Sai Ding, Amber Li, Yi Lu, Liugang Sheng, Miachel Song, Zhihong Yu, and especially the referees for their very helpful comments and suggestions. We benefit from the presentations at the Annual Conference of China Trade Research Group, the University of Glasgow, Asia Pacific Trade Seminars, Hong Kong Institute of Monetary Research, Hong Kong University of Science and Technology, Midwest International Economics Meeting, Kobe University, Nihon University, Hitotsubashi International Conference, Chinese Unviersity of Hong Kong, and the 16th NBER-CCER Annual Conference. Qiu thanks the Hong Kong Institute of Monetary Research for its financial support and hosting his visit during the last stage of this project. Yu thanks China's National Natural Science Foundation and China's National Social Science Foundation for financial supports (No. 71625007; No. 16AZD003). We also thank Mohan Zhou for his valuable research assistance. All errors are ours.

Keywords

  • Multiproduct firm
  • Managerial efficiency
  • product line
  • Export product scope
  • Trade liberalization

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