Market Size, Competition, and the Product Mix of Exporters | Zendy

Thierry Mayer | Zendy; Marc J. Melitz | Zendy; Gianmarco I.P. Ottaviano | Zendy

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Market Size, Competition, and the Product Mix of Exporters

Author(s) -

Thierry Mayer,

Marc J. Melitz,

Gianmarco I.P. Ottaviano

Publication year - 2014

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.104.2.495

Subject(s) - competition (biology) , industrial organization , productivity , destinations , product (mathematics) , business , product market , skew , economics , international economics , microeconomics , tourism , ecology , mathematics , biology , political science , law , macroeconomics , incentive , physics , astronomy , geometry

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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