Export capacity constraints and distortions

Xiao Feng, Yongjin Wang and Laixun Zhao

Journal of Development Economics, 2022, vol. 157, issue C

Abstract: We investigate how export capacity constraints (ECCs) affect resource misallocation and aggregate productivity by distorting the firm's export mode. Using unique datasets in China, we first document a number of observed patterns for the so-called “dual-channel exporters”, which export only a fraction of their products directly with the rest via intermediaries. We show that introducing capacity constraints reconciles the theory with the observed patterns in the data. Our quantitative exercise suggests that removal of the ECCs leads to gains of 2.27% in aggregate productivity, 4.97% in total exports and 0.37% in national welfare.

Keywords: Dual-channel exporters; Capacity constraint; Distortion; Resource misallocation (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:157:y:2022:i:c:s0304387822000542

DOI: 10.1016/j.jdeveco.2022.102889

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