American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Market Size, Competition, and the Product Mix of Exporters
American Economic Review
vol. 104,
no. 2, February 2014
(pp. 495–536)
Abstract
We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export market induces a firm to skew its export sales toward its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Theoretically, this within-firm change in product mix driven by the trading environment has important repercussions on firm productivity. A calibrated fit to our theoretical model reveals that these productivity effects are potentially quite large.Citation
Mayer, Thierry, Marc J. Melitz, and Gianmarco I. P. Ottaviano. 2014. "Market Size, Competition, and the Product Mix of Exporters." American Economic Review, 104 (2): 495–536. DOI: 10.1257/aer.104.2.495Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- F41 Open Economy Macroeconomics
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms