Product mix and firm productivity responses to trade competition

Thierry Mayer, Marc Melitz and Gianmarco Ottaviano

No 562, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We document how demand shocks in export markets lead French multi-product exporters to re-allocate 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.

Date: 2016
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-int and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (95)

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https://www.econstor.eu/bitstream/10419/148380/1/874317452.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:562

DOI: 10.2139/ssrn.2875415

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