The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers

46 Pages Posted: 6 Jan 2012 Last revised: 28 Oct 2014

See all articles by Mark J. Roberts

Mark J. Roberts

Pennsylvania State University - College of the Liberal Arts - Department of Economics; National Bureau of Economic Research (NBER)

Daniel Yi Xu

Duke University

Daniel Yi Xu

affiliation not provided to SSRN

XiaoYan Fan

affiliation not provided to SSRN

Shengxing Zhang

London School of Economics (LSE) - Department of Economics

Date Written: January 2012

Abstract

In this paper we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002-2006 to estimate an empirical model of export demand, pricing, and market participation by destination market. We use the model to construct indexes of firm-level demand, cost, and export market profitability. The empirical results indicate substantial firm heterogeneity in both the demand and cost dimensions with demand being more dispersed. The firm-specific demand and cost components are very useful in explaining differences in the extensive margin of trade, the length of time a firm exports to a destination, and the number and mix of destinations, as well as the export prices, while cost is more important in explaining the quantity of firm exports on the intensive margin. We use the estimates to analyze the reallocation resulting from removal of the quota on Chinese footwear exports to the EU and find that it led to a rapid restructuring of export supply sources in favor of firms with high demand and low cost indexes.

Suggested Citation

Roberts, Mark J. and Yi Xu, Daniel and Yi Xu, Daniel and Fan, XiaoYan and Zhang, Shengxing, The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers (January 2012). NBER Working Paper No. w17725. Available at SSRN: https://ssrn.com/abstract=1980575

Mark J. Roberts (Contact Author)

Pennsylvania State University - College of the Liberal Arts - Department of Economics ( email )

513 Kern Graduate Building
University Park, PA 16802-3306
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Daniel Yi Xu

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Daniel Yi Xu

affiliation not provided to SSRN

No Address Available

XiaoYan Fan

affiliation not provided to SSRN ( email )

Shengxing Zhang

London School of Economics (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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