Import liberalization and export product mix

forthcoming at Canadian Journal of Economics

38 Pages Posted: 23 Mar 2021

See all articles by Haichao Fan

Haichao Fan

Fudan University - School of Economics

Tuan Anh Luong

De Montfort University - Faculty of Business and Law

Edwin Lai

Hong Kong University of Science & Technology (HKUST)

Date Written: March 22, 2021

Abstract

This paper develops a monopolistic competition model of multiproduct
firms to explain the effect of trade liberalization on the product mix of multiproduct
exporting firms. The model shows that input-tariff reduction leads to increases
in a firm’s export values, especially for products that are farther from a firm’s
core competency. To test the theoretical predictions, we use the merged data built
upon the highly disaggregated Chinese firm-level production data and customs
data for 2000-2006. Consistent with the theory, the positive impact of input trade
liberalization on export value is found to be more pronounced for peripheral
products, and input-tariff reduction also expands a firm’s product scope, affecting
firm’s average productivity.

Keywords: Product mix, trade liberalization

JEL Classification: F1

Suggested Citation

Fan, Haichao and Luong, Tuan Anh and Lai, Edwin, Import liberalization and export product mix (March 22, 2021). forthcoming at Canadian Journal of Economics, Available at SSRN: https://ssrn.com/abstract=3810013

Haichao Fan

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Tuan Anh Luong (Contact Author)

De Montfort University - Faculty of Business and Law ( email )

United Kingdom

Edwin Lai

Hong Kong University of Science & Technology (HKUST)

Clearwater Bay
Kowloon, 999999
Hong Kong

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