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Market entry and the dynamics of export product quality: Evidence from Chinese manufacturing firms

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  • He, Dongwei
  • Wang, Yunfei
  • You, Kai

Abstract

The quality of export products is essential for understanding the dynamics of international trade. This study deploys a theoretical framework to illustrate that the optimal policy for a new entrant firm exporting to the United States from China is to set the product quality as relatively low initially and improve it over time as the product gains recognition from U.S. consumers. Using data on transaction-level Chinese exports to the U.S. data between 2000 and 2013, we quantify the export product quality and its trend. Empirical results are consistent with model implications. Our findings are robust to alternative specifications and extensions.

Suggested Citation

  • He, Dongwei & Wang, Yunfei & You, Kai, 2023. "Market entry and the dynamics of export product quality: Evidence from Chinese manufacturing firms," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 692-706.
    • Handle: RePEc:eee:ecanpo:v:78:y:2023:i:c:p:692-706
    DOI: 10.1016/j.eap.2023.04.001
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    More about this item

    Keywords

    Export quality; Export experience; Quality upgrading; China;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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