Market Size, Competition, and the Product Mix of Exporters

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info:eu-repo/semantics/altIdentifier/doi/10.1257/aer.104.2.495

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info:eu-repo/semantics/altIdentifier/hdl/2441/6g0gsihsjmn5snc9pb0jo6hhp

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Thierry Mayer et al., « Market Size, Competition, and the Product Mix of Exporters », Archive ouverte de Sciences Po (SPIRE), ID : 10.1257/aer.104.2.495


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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.

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