Product Mix and Firm Productivity Responses to Trade Competition

Thierry Mayer, Marc Melitz and Gianmarco Ottaviano

SciencePo Working papers Main from HAL

Abstract: We document how demand shocks in export markets lead French multi-product exporters to reallocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multiproduct firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets – and the induced product mix reallocations – induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial – and explain an important share of aggregate productivity fluctuations for French manufacturing.

Keywords: Trade competition; French Firms; Export markets; Productivity fluctuations (search for similar items in EconPapers)
Date: 2016-07-01
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03393193
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Product Mix and Firm Productivity Responses to Trade Competition (2021)
Working Paper: Product Mix and Firm Productivity Responses to Trade Competition (2021)
Working Paper: Product Mix and Firm Productivity Responses to Trade Competition (2021)
Working Paper: Product mix and firm productivity responses to trade competition (2016)
Working Paper: Product Mix and Firm Productivity Responses to Trade Competition (2016)
Working Paper: Product Mix and Firm Productivity Responses to Trade Competition (2016)
Working Paper: Product mix and firm productivity responses to trade competition (2016)
Working Paper: Product Mix and Firm Productivity Responses to Trade Competition (2016)
Working Paper: Product Mix and Firm Productivity Responses to Trade Competition (2016)
Working Paper: Product mix and firm productivity responses to trade competition (2016)
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