EconPapers    
Economics at your fingertips  
 

The Impact of Chinese Competition along the Quality Ladder

Paul Piveteau and Gabriel Smagghue
Additional contact information
Paul Piveteau: Johns Hopkins University
Gabriel Smagghue: uc3m

No 509, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: We investigate the impact of Chinese competition faced by French exporters in their destination markets. We document that French firms with low prices are significantly more affected by the rise of China in international markets. To rationalize this finding, we propose a random coefficient, discrete choice model of demand in which consumers have heterogeneous preferences regarding product characteristics and prices. This heterogeneity in preferences implies more realistic substitution patterns across producers relative to existing trade models. In particular, it allows for French varieties located at the bottom of the price distribution to be closer substitutes to Chinese goods, due to their proximity in the product space. Using firm-level trade data, we estimate the model and quantify the unequal effect of China across French exporters in the footwear industry, between 1997 and 2010. We find substantial differences across firms: the rise in Chinese exports implied losses in market shares five times larger at the bottom of the price distribution relative to the top. Moreover, we show that allowing French firms to adjust their product quality does little to help them escape Chinese competition.

New Economics Papers: this item is included in nep-cna, nep-com and nep-int
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://economicdynamics.org/meetpapers/2018/paper_509.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:509

Access Statistics for this paper

More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().

 
Page updated 2019-01-31
Handle: RePEc:red:sed018:509