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Market size, competition, and the product mix of exporters

Author

Listed:
  • Mayer, Thierry
  • Melitz, Marc J.
  • Ottaviano, Gianmarco I. P.
Abstract
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 towards 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.

Suggested Citation

  • Mayer, Thierry & Melitz, Marc J. & Ottaviano, Gianmarco I. P., 2012. "Market size, competition, and the product mix of exporters," LSE Research Online Documents on Economics 54286, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:54286
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    File URL: http://eprints.lse.ac.uk/54286/
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    trading partners; multiproduct firms; trade models;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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