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Competition and product mix adjustment of multi-product exporters : Evidence from Belgium

Author

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  • Koen Breemersch

    () (University of Leuven, Waaistraat 6, 3000 Leuven, Belgium)

Abstract

This paper studies the effects of competition in a destination market on the product sales distribution of Belgian multi-product firms using the framework of Mayer et al. (2014). We show that in high competition markets multi-product firms export relatively more of their core products thus skewing the sales distribution towards the best-performing varieties of the firm. A calibrated fit indicates that the general productivity effects that are associated with this skewness reaction are potentially large as firms adjust their production process to accommodate the increased demand for its core products. The skewness effect of high competition markets is only observed for products that the firm eventually drops, underlining the importance of the product extensive margin adjustment. The effect is not limited to manufacturing firms, but also extends to intermediaries in trade and is shown to depend on the type of good that is exported.

Suggested Citation

  • Koen Breemersch, 2016. "Competition and product mix adjustment of multi-product exporters : Evidence from Belgium," Working Paper Research 298, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:201606-298
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp298en.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    international trade; multi-product firms; competition; product mix;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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