Department of Economics
NBER Working Papers and Publications
|January 2012||The Role of Firm Factors in Demand, Cost, and Export Market Selection for Chinese Footwear Producers|
with Mark J. Roberts, Daniel Yi Xu, Shengxing Zhang: w17725
In this paper we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002-2006 to estimate an empirical model of export demand, pricing, and market participation by destination market. We use the model to construct indexes of firm-level demand, cost, and export market profitability. The empirical results indicate substantial firm heterogeneity in both the demand and cost dimensions with demand being more dispersed. The firm-specific demand and cost components are very useful in explaining differences in the extensive margin of trade, the length of time a firm exports to a destination, and the number and mix of destinations, as well as the export prices, while cost is more important in explaining the quantity of firm ex...