American Economic Review Vol. 104 No. 2 2014

Market Size, Competition, and the Product Mix of Exporters

Thierry Mayer¹; Marc J. Melitz²; Gianmarco I. P. Ottaviano³

¹ Sciences-Po, 28 rue des Saints-Pères, 75007 Paris, France, CEPII, and CEPR (e-mail: ) · ² Department of Economics, Harvard University, Cambridge, MA 02138, CEPR, and NBER. · ³ London School of Economics, Houghton Street, London WC2A 2AE, United Kingdom, CEP, and CEPR (e-mail: )

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.

DOI

10.1257/aer.104.2.495

Volume

104

Issue

2

Pages

495-536

Language

en

Sources

bibtex:phds-export.bib crossref

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓