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Market Size, Competition, and the Product Mix of Exporters

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.
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Submitted on : Wednesday, December 1, 2021 - 9:24:47 AM
Last modification on : Friday, June 17, 2022 - 4:10:41 PM

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Thierry Mayer, Marc Melitz, Gianmarco Ottaviano. Market Size, Competition, and the Product Mix of Exporters. American Economic Review, American Economic Association, 2014, 104 (2), pp.495-536. ⟨10.1257/aer.104.2.495⟩. ⟨hal-03460548⟩

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