Marc Melitz
David A. Wells Professor of Political Economy
Harvard University
"Market Size, Competition, and the Product Mix of Exporters"
Thursday, December 6, 2012
4:00 pm - C103 Hesburgh Center
Abstract
We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within-firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large.
Coauthors
Thierry Mayer
Sciences-Po
CEPII and CEPR
Gianmarco I. P. Ottaviano
London School of Economics
Bocconi University, CEP and CEPR
To view full paper, click here.
