Multi-product firms, product scope, and the policy of export tax rebate

Yong Tan, Jian Han and Yeqing Ma

China Economic Review, 2015, vol. 35, issue C, 33-46

Abstract: This paper extends the model of Nocke and Yeaple (2014) to analyze the impact of the export tax rebate (ETR) changes on multi-product firms' product scope. In response to ETR changes, firms optimally reallocate their organizational capital, and adjust the intensive and extensive margins of production. We test the model's predictions using firm-level export and ETR data from China. We find that less profitable products, facing larger ETR reductions, and products in which China has a comparative disadvantage, are more likely to be dropped.

Keywords: Multi-product firms; Product Scope; Export tax rebate; Organizational capital (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:35:y:2015:i:c:p:33-46

DOI: 10.1016/j.chieco.2015.05.004

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