Discussion Papers

Multiproduct Firms, Export Product Scope, and Trade Liberalization: The Role of Managerial Efficiency

By Larry Qiu and Miaojie Yu

ERIA Discussion Paper 2014-06

Posted: April 2014

Abstract


This paper provides a theoretical and empirical analysis of the effects of one-sided tariff cuts on firms' export product scope. The theoretical model explicitly incorporates cost of management in addition to the commonly used production cost. The analysis predicts that the home country's tariff cut, a home firm's export product scope expands (shrinks) if the firm's management cost is low (high). These predictions are supported by our empirical analysis based on data on Chinese firms from 2000 to 2006.

ERIA-DP-2014-06

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