The role of firm factors in demand, cost, and export market selection for chinese footwear producers

Mark John Roberts, Daniel Yi Xu, Xiaoyan Fan, Shengxing Zhang

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

In this article, we use micro data on both trade and production for a sample of large Chinese manufacturing firms in the footwear industry from 2002 to 2006 to estimate an empirical model of export demand, pricing, and market participation by destination market. We use the model to construct indexes of firm-level demand, marginal cost, and fixed cost. The empirical results indicate substantial firm heterogeneity in all three dimension with demand being the most dispersed. The firm-specific demand and marginal cost components account for over 30% of market share variation, 40% of sales variation, and over 50% of price variation among exporters. The fixed cost index is the primary factor explaining differences in the pattern of destination markets across firms. The estimates are used to analyse the supply reallocation following the removal of the quota on Chinese footwear exports to the EU. This led to a rapid restructuring of export supply sources on both the intensive and extensive margins in favour of firms with high demand and low fixed costs indexes, with marginal cost differences not being important.

Original languageEnglish (US)
Pages (from-to)2429-2461
Number of pages33
JournalReview of Economic Studies
Volume85
Issue number4
DOIs
StatePublished - Oct 1 2018

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Factors
Footwear
Export markets
Market selection
Costs
Marginal cost
Fixed costs
Destination
Export supply
Pricing
Micro data
Reallocation
Empirical results
Market participation
Market share
Extensive margin
Firm heterogeneity
Empirical model
Footwear industry
Intensive margin

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

Roberts, Mark John ; Xu, Daniel Yi ; Fan, Xiaoyan ; Zhang, Shengxing. / The role of firm factors in demand, cost, and export market selection for chinese footwear producers. In: Review of Economic Studies. 2018 ; Vol. 85, No. 4. pp. 2429-2461.
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The role of firm factors in demand, cost, and export market selection for chinese footwear producers. / Roberts, Mark John; Xu, Daniel Yi; Fan, Xiaoyan; Zhang, Shengxing.

In: Review of Economic Studies, Vol. 85, No. 4, 01.10.2018, p. 2429-2461.

Research output: Contribution to journalArticle

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