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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1 February 2014

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American Economic Review 104(2) , pp.495?536, 2014

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DOI: 10.1257/aer.104.2.495

https://www.aeaweb.org/articles?id=10.1257/aer.104.2.495

This Journal article is published under the centre's Trade programme.