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How exporting firms respond to technical barriers to trade?
Author(s) -
Hu Cui,
Lin Faqin,
Tan Yong,
Tang Yihong
Publication year - 2019
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12786
Subject(s) - upgrade , product (mathematics) , economics , quality (philosophy) , international economics , international trade , value (mathematics) , technical barriers to trade , industrial organization , business , trade barrier , computer science , machine learning , philosophy , geometry , mathematics , epistemology , operating system
This paper investigates how technical barriers to trade (TBTs) affect firm exports. The implementation of the “child‐resistance” decision (CR decision) in the EU offers an ideal quasi‐natural experiment to identify the causal effect of TBTs on firm performance. Using data on Chinese firms that exported cigarette lighters between 2004 and 2010, we show that firms exporting to the EU not only adjust their product quality to meet the requirements in the CR decision, but also upgrade their product quality in other dimensions. However, both the export value and export volume to the EU decline. At the same time, less productive exporters are forced to exit from the EU market. Lastly, heterogeneous effects of the CR decision are documented.