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Export Capacity Constraints and Distortions

Xiao Feng, Yongjin Wang and Laixun Zhao
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Xiao Feng: School of Economics, Nankai University, CHINA
Yongjin Wang: School of Economics, Nankai University, CHINA

No DP2022-20, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

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 socalled “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)
JEL-codes: F10 O18 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2022-04
New Economics Papers: this item is included in nep-cna and nep-int
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