 Riders on the storm: How do firms navigate production and market conditions amid El Niño?Maria Bas and Caroline Paunov Journal of Development Economics, 2025, vol. 172, issue C Abstract: This paper investigates how heavy rainfalls resulting from the 2002–03 El Niño climate pattern affect Ecuadorian firms' production and market conditions. We show that affected firms' revenue productivity (TFP-R) and markups decrease. This is due to production efficiency losses (TFP-Q) and higher marginal costs of initially less efficient firms. Decreased product output prices in response to lower product demand explain the impact on initially more efficient firms. However, the shock neither affects market shares nor survival rates of initially less efficient firms. Consequently, the productivity distribution of Ecuador's industry is not affected by the shock. We also show a swift recovery of production and market demand in the immediate aftermath of the shock. Impacts in 2002–03 are like those of the 1997–98 rainfall shock. Differentiating firms by their TFP-R rather than their production efficiency indicates firms with better (worse) market positions can mitigate the negative impacts of the shock more (less). Keywords: Natural disaster; Marginal costs; Markups; Firm output prices; Quantity productivity (TFP-Q); Revenue productivity (TFP-R); Firms; Ecuador (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:172:y:2025:i:c:s0304387824001238 DOI: 10.1016/j.jdeveco.2024.103374 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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