Product mix and firm productivity responses to trade competition
We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multiproduct firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets - and the induced product mix reallocations - induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial - and explain an important share of aggregate productivity fluctuations for French manufacturing.
Year of publication: |
2016
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Authors: | Mayer, Thierry ; Melitz, Marc J. ; Ottaviano, Gianmarco I. P. |
Publisher: |
Frankfurt a. M. : Goethe University Frankfurt, Center for Financial Studies (CFS) |
Saved in:
freely available
Series: | CFS Working Paper Series ; 562 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 10.2139/ssrn.2875415 [DOI] 874317452 [GVK] hdl:10419/148380 [Handle] RePEc:zbw:cfswop:562 [RePEc] |
Source: |
Persistent link: https://www.econbiz.de/10011571739
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