Demand, costs and product scope in the export market

Bee Yan Aw, Yi Lee

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

In this paper, we distinguish between the contributions of two dimensions of firm heterogeneity, quality and productivity, to the export performance of Taiwanese multiproduct firms. We develop a theoretical model in which the relative importance of these two dimensions of firm heterogeneity depend on the degrees of product differentiation and cost elasticities of quality improvement. Our empirical results confirm the predictions of the theoretical model. Both quality and productivity play important roles in explaining firm export participation and export scope. Quality contributes more to export decisions for firms in more differentiated product markets and products with lower cost elasticities of quality improvements while productivity effects are stronger in markets with low degrees of product differentiation but high cost elasticities of quality improvements.

Original languageEnglish (US)
Pages (from-to)28-49
Number of pages22
JournalEuropean Economic Review
Volume100
DOIs
StatePublished - Nov 2017

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Productivity
Costs
Elasticity
Export markets
Quality improvement
Product differentiation
Firm heterogeneity
Prediction
Product market
Empirical results
Export performance
Differentiated products
Multiproduct firms
Relative importance
Product cost
Participation

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

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Demand, costs and product scope in the export market. / Aw, Bee Yan; Lee, Yi.

In: European Economic Review, Vol. 100, 11.2017, p. 28-49.

Research output: Contribution to journalArticle

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