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

Larry Qiu and Miaojie Yu

No 22014, Working Papers from Hong Kong Institute for Monetary Research

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 (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-02
New Economics Papers: this item is included in nep-bec, nep-eff, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency (2014)
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