Why do the Least Productive Firms Export Most?
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| Title | Why do the Least Productive Firms Export Most?
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| Author | Liu Qing,Zhang Yan and Zhang Xianfeng |
| Organization | HeFei University of Technology |
| Email | liuqingshufe@gmail.com |
| Key Words | Export Intensity; Productivity; Trade Cost Heterogeneity |
| Abstract | Why do the least productive firms export most? By introducing the tradeoff between the trade cost and export intensity, the paper proposes a heterogeneous firms trade model in which the exporter’s choice on export intensity is endogenous. The model shows that, the least efficient firms would share the trade cost with trade partners or governments and export with higher export intensity, while the most efficient firms export with lower export intensity. When the foreign demand drops, the big-sized higher-intensity firms would quit the market first. Using the micro-level data of Chinese manufacturing firms, we provide robust evidence consistent with the predictions and mechanism of our model. |
| Serial Number | WP625 |
| Time | 2014-08-05 |
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