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

Katariina Nilsson Hakkala and Yao Pan ()

No 71, ETLA Working Papers from The Research Institute of the Finnish Economy

Abstract: Abstract This paper analyzes how intensified Chinese export competition affects the exports and product ranges of firms from Finland. Using a novel identification strategy that exploits changes in Chinese export policies, we find that Chinese export competition reduces aggregate product-level exports. Firm-level analysis 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 F15 F61 L25 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2019-10-30
New Economics Papers: this item is included in nep-bec, nep-cna and nep-int
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