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Market size, competition, and the product mix of exporters

Mayer, Thierry, Melitz, Marc and Ottaviano, Gianmarco I. P. (2014) Market size, competition, and the product mix of exporters. American Economic Review, 104 (2). pp. 495-536. ISSN 0002-8282

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Abstract

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.

Item Type: Article
Official URL: http://www.aeaweb.org/aer/index.php
Additional Information: © 2014 AEA
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior
D - Microeconomics > D2 - Production and Organizations > D24 - Production; Cost; Capital and Total Factor Productivity; Capacity
F - International Economics > F1 - Trade > F13 - Commercial Policy; Protection; Promotion; Trade Negotiations; International Trade Organizations
F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F41 - Open Economy Macroeconomics
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
Sets: Departments > Economics
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Funders: European Commission’s Seventh Research Framework Programme, European Commission, Melitz thanks the Sloan Foundation
Projects: #225551
Date Deposited: 14 Jun 2013 16:06
URL: http://eprints.lse.ac.uk/47977/

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