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Emerging Trade Battlefield with China: Export Competition and Firms’ Coping Strategies

Yao Pan and Katariina Nilsson Hakkala
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Yao Pan: George Washington University
Katariina Nilsson Hakkala: ETLA and Aalto University

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: This paper analyzes how intensified Chinese export competition affects the exports and product ranges of Western firms. Using a novel identification strategy that exploits changes in Chinese export policies, we find that Chinese export competition reduces aggregate product-level exports of Finland. Firm-level analysis using administrative data further shows that Chinese competition leads to substantial price cuts to retain market shares, especially for homogeneous products. In addition, we also discover that firms respond to the increased level of Chinese export competition by dropping their marginal products. Taken together, these results highlight the importance of export competition with China for developed countries.

Keywords: Trade Flows; Export Competition; Firm-level; Product Mix; China (search for similar items in EconPapers)
JEL-codes: F14 F61 L25 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2019
New Economics Papers: this item is included in nep-cna and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2019-14

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