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Multi-product firms, product scope, and the policy of export tax rebate

Author

Listed:
  • Tan, Yong
  • Han, Jian
  • Ma, Yeqing

Abstract

This paper extends the model of Nocke and Yeaple (2014) to analyze the impact of the export tax rebate (ETR) changes on multi-product firms' product scope. In response to ETR changes, firms optimally reallocate their organizational capital, and adjust the intensive and extensive margins of production. We test the model's predictions using firm-level export and ETR data from China. We find that less profitable products, facing larger ETR reductions, and products in which China has a comparative disadvantage, are more likely to be dropped.

Suggested Citation

  • Tan, Yong & Han, Jian & Ma, Yeqing, 2015. "Multi-product firms, product scope, and the policy of export tax rebate," China Economic Review, Elsevier, vol. 35(C), pages 33-46.
  • Handle: RePEc:eee:chieco:v:35:y:2015:i:c:p:33-46
    DOI: 10.1016/j.chieco.2015.05.004
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    References listed on IDEAS

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    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. Ma, Yue & Tang, Heiwai & Zhang, Yifan, 2014. "Factor Intensity, product switching, and productivity: Evidence from Chinese exporters," Journal of International Economics, Elsevier, vol. 92(2), pages 349-362.
    3. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2014. "Market Size, Competition, and the Product Mix of Exporters," American Economic Review, American Economic Association, vol. 104(2), pages 495-536, February.
    4. Chi-Chur Chao & Eden S. H. Yu, 2014. "Export Duty Rebates and Export Performance: Theory and China's Experience," World Scientific Book Chapters,in: TRADE-RELATED INVESTMENT MEASURES Theory and Applications, chapter 18, pages 259-272 World Scientific Publishing Co. Pte. Ltd..
    5. Catherine Fuss & Linke Zhu, 2012. "Comparative advantage, multi-product firms and trade liberalisation : An empirical test," Working Paper Research 219, National Bank of Belgium.
    6. Manova, Kalina & Yu, Zhihong, 2017. "Multi-product firms and product quality," Journal of International Economics, Elsevier, vol. 109(C), pages 116-137.
    7. repec:dau:papers:123456789/13784 is not listed on IDEAS
    8. Nocke, Volker & Yeaple, Stephen R, 2008. "Globalization and the Size Distribution of Multiproduct Firms," CEPR Discussion Papers 6948, C.E.P.R. Discussion Papers.
    9. Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May.
    10. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1271-1318.
    11. Volker Nocke & Stephen Yeaple, 2014. "Globalization And Multiproduct Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 993-1018, November.
    12. Carsten Eckel & J. Peter Neary, 2010. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 188-217.
    13. repec:wyi:journl:002196 is not listed on IDEAS
    14. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2014. "Market Size, Competition, and the Product Mix of Exporters," American Economic Review, American Economic Association, vol. 104(2), pages 495-536, February.
    15. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2010. "Multiple-Product Firms and Product Switching," American Economic Review, American Economic Association, vol. 100(1), pages 70-97, March.
    16. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2014. "Market Size, Competition, and the Product Mix of Exporters," American Economic Review, American Economic Association, vol. 104(2), pages 495-536, February.
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    Cited by:

    1. L. An & C. Hu & Yong Tan, 2017. "Regional effects of export tax rebate on exporting firms: Evidence from China," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 774-798, September.
    2. Hu, Cui & Tan, Yong, 2017. "Learning to Import From Neighbors," MPRA Paper 78108, University Library of Munich, Germany.
    3. repec:bla:apacel:v:31:y:2017:i:1:p:66-78 is not listed on IDEAS

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