Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency

HKIMR Working Paper No.02/2014

53 Pages Posted: 28 Jan 2014

See all articles by Larry D. Qiu

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

Miaojie Yu

Peking University - China Center for Economic Research (CCER)

Date Written: January 27, 2014

Abstract

This paper provides a theoretical and empirical analysis of the effects of one-sided tariff cuts on firms' export product scope. The theoretical model explicitly incorporates cost of management in addition to the commonly used production cost. Firms are heterogeneous in terms of managerial efficiency but homogenous in terms of production productivity. The analysis predicts that the home country's tariff cut reduces all home firms' export product scope, whereas in response to the foreign country's tariff cut, a home firm's export product scope expands (shrinks) if the firm's management cost is low (high). These predictions are supported by our empirical analysis based on data on Chinese firms from 2000 to 2006.

Keywords: Multiproduct Firm, Management Cost, Managerial Efficiency, Export Product Scope, Trade Liberalization, China

JEL Classification: F12, F13, F15

Suggested Citation

Qiu, Larry Dongxiao and Yu, Miaojie, Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency (January 27, 2014). HKIMR Working Paper No.02/2014. Available at SSRN: https://ssrn.com/abstract=2386412 or http://dx.doi.org/10.2139/ssrn.2386412

Larry Dongxiao Qiu (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

Miaojie Yu

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, Beijing 100871
China
+86-10-6275-3109 (Phone)

HOME PAGE: http://mjyu.ccer.edu.cn

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