The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers

Roberts, Mark C.; Xu, Ye; Fan, Xiaoyan; Zhang, Shengxing

doi:10.3386/w17725

Cited by 30 publications

(16 citation statements)

References 23 publications

(46 reference statements)

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“…To explain the data we need firm and market specific demand shocks, as postulated here. Such demand shocks do much of the work in fitting the data, which is also consistent with the work of Roberts et al (2012) and Eaton et al (2011a,).…”

Section: Introductionsupporting

confidence: 70%

“…R BD,US and R US are approximated by the total Bangladeshi 41 Among other papers that emphasize the dominant role of changes in demand over productivity shocks are Roberts et al (2012), who show that demand shocks are the driving force behind firms' turnover, and Eaton et al (2011b), who demonstrate that changes in demand explain more than 80% of the drop in trade/GDP during the Great Recession of 2008-2009. 42 In previous work, see Demidova et al (2012), we showed that when the EU offered EBA preferences to Bangladesh, ROOs were less restrictive in non-wovens than in wovens.…”

Section: Policy Experimentsmentioning

confidence: 99%

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Firm heterogeneity and costly trade: A new estimation strategy and policy experiments

Cherkashin

Demidova

Kee

et al. 2015

Journal of International Economics

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a b s t r a c tWe build a tractable partial equilibrium model in the spirit of Melitz (2003) to help understand the role of trade preferences given to developing countries, as well as the efficacy of various subsidy policies. The model allows for firm level heterogeneity in both demand and productivity and lets the mass of firms that enter be endogenous. Trade preferences given by one country have positive spillovers on exports to others in this model. Preferences given by the EU to Bangladesh in an industry raise profits, resulting in entry, and some of these firms also export to the US. In contrast, simple competitive models would predict a fall in exports to the US. Such spillovers are shown to be large when exports are not constrained by quotas, suggesting that unilateral preferences given to developing countries might be more efficacious than expected in promoting their exports. The parameters of the model are estimated using cross sectional customs data on Bangladeshi exports of apparel to the US and EU. Counterfactual experiments regarding the effects of reducing costs, both fixed and marginal, or of trade preferences (with distortionary Rules of Origin) offered by an importing country are performed. The counterfactuals show that reducing fixed costs at various levels has very different effects and suggest that such reductions are more effective in promoting exports when applied at later stages when firms are more committed to production. A subsidy of 1.5 million dollars to industry entry costs raises exports by only 40 cents for every dollar spent, but when applied to fixed costs of production, it raises exports by $25 per dollar spent.

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Section: Introductionsupporting

confidence: 70%

Section: Policy Experimentsmentioning

confidence: 99%

Firm heterogeneity and costly trade: A new estimation strategy and policy experiments

Cherkashin

Demidova

Kee

et al. 2015

Journal of International Economics

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show abstract

“…Empirical studies in international trade such as Roberts et al . [] and Khandelwal et al . [] have demonstrated trade liberalization often confers additional efficiency gains through the channel of market share reallocation across individual exporters (i.e., exporting countries in the present case).…”

Section: Welfare Analysis Of the Coffee Cartelmentioning

confidence: 99%

Market Power in International Commodity Trade: The Case of Coffee

Igami

2015

The J Industrial Economics

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This paper studies the impact of market power on international commodity prices. I use a standard oligopoly model and exploit historical variations in the structure of the international coffee bean market to assess the impact of a cartel treaty on coffee prices and its global welfare consequences. The results suggest that the International Coffee Agreement (ICA, 1965–89) raised its price by 75% above the Cournot‐competitive level, annually transferring approximately $12 billion from consumers to exporting countries, and its lapse in 1989 explains four‐fifths of the subsequent price decline, that is, the ‘coffee crisis.’

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“…(), Roberts et al. (), and Pozzi and Schivardi (). These intuitive approaches, however, are not feasible if price data are not observable to the researcher, which is quite common in production data sets.…”

Section: Introductionmentioning

confidence: 99%

Productivity or Unexpected Demand Shocks: What Determines Firms' Investment and Exit Decisions?

Kumar

Zhang

2018

Int Economic Review

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We investigate the roles played by unexpected demand shocks, besides productivity, on firms' capital investment and exit decisions. We propose a practical approach to recover unexpected firm-level demand shocks using inventory data. The recognition of demand shocks and inventory also improves the productivity estimation. The empirical results indicate that although productivity and demand shocks are both significant factors determining firm behavior, the former is more dominant for investment decision and the latter is more salient for firm exit. These findings confirm that unexpected demand shocks, besides persistent productivity, are important factors when analyzing capital investment and firm exit decisions. * Manuscript

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The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers

Abstract: NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Cited by 30 publications

References 23 publications

Firm heterogeneity and costly trade: A new estimation strategy and policy experiments

Firm heterogeneity and costly trade: A new estimation strategy and policy experiments

Market Power in International Commodity Trade: The Case of Coffee

Productivity or Unexpected Demand Shocks: What Determines Firms' Investment and Exit Decisions?

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