WORKING PAPERS
"China’s export registration in the automobile industry: Effects on manufacturer-intermediary match efficiency"
In 2007, China implemented a policy requiring automobile producers to distribute through at most three trade intermediaries and list their intermediaries on a registry. Motivated by the registration requirements and granularity in the order sizes handled by most intermediaries, this paper develops a model to describe the matches among automakers and intermediaries. The model shows market division arises endogenously due to the regulation. It creates inefficiencies in matching and double marginalization. The model predictions coincide with a number of stylized facts: a strong decline in the number of auto intermediaries, assortative matching, export price increases for intermediaries, and substantial churning in the sets of intermediaries registered by the automakers. Welfare analysis in terms of total profit shows that this regulation benefits relatively less efficient automakers. The lowest cost automaker as well as intermediaries are worse off.
In 2007, China implemented a policy requiring automobile producers to distribute through at most three trade intermediaries and list their intermediaries on a registry. Motivated by the registration requirements and granularity in the order sizes handled by most intermediaries, this paper develops a model to describe the matches among automakers and intermediaries. The model shows market division arises endogenously due to the regulation. It creates inefficiencies in matching and double marginalization. The model predictions coincide with a number of stylized facts: a strong decline in the number of auto intermediaries, assortative matching, export price increases for intermediaries, and substantial churning in the sets of intermediaries registered by the automakers. Welfare analysis in terms of total profit shows that this regulation benefits relatively less efficient automakers. The lowest cost automaker as well as intermediaries are worse off.
"Productivity, Market Penetration and Allocation of Sales" (with Zhe Chen)
This paper examines the sales allocation of Chinese exporters. We demonstrate that highly productive firms are less export oriented compared with less productive ones. This negative correlation between firm productivity and export intensity (defined as export-domestic sales ratio) remains robust when we control firm ownership, factor intensity, and rule out impacts of processing trade. And it is more pronounced among firms who are domestically owned, produce differentiated goods, or belong to advertising intensive industries. In order to rationalize our empirical findings, we extend Arkolakis (2010) model to allow marketing cost elasticities to be heterogeneous across destination markets. A higher marketing cost elasticity domestically gives rise to a faster sales expansion in home market as firm productivity grows.
This paper examines the sales allocation of Chinese exporters. We demonstrate that highly productive firms are less export oriented compared with less productive ones. This negative correlation between firm productivity and export intensity (defined as export-domestic sales ratio) remains robust when we control firm ownership, factor intensity, and rule out impacts of processing trade. And it is more pronounced among firms who are domestically owned, produce differentiated goods, or belong to advertising intensive industries. In order to rationalize our empirical findings, we extend Arkolakis (2010) model to allow marketing cost elasticities to be heterogeneous across destination markets. A higher marketing cost elasticity domestically gives rise to a faster sales expansion in home market as firm productivity grows.
PUBLICATIONS
"Demand shocks, financial costs, and export margins: Evidence from China" (with Bo Chen, Junjie Hong, and Ran Jing)
Review of International Economics, forthcoming. [link]
"Exchange rate risk and trade mode choice in processing trade: Evidence from Chinese data" (with Zhe Chen and Junjie Hong)
Review of International Economics, 28(2) 2020, pp. 537-564 [link]
"Local institutions, Foreign Direct Investment and Productivity of Domestic Firms" (with Junjie Hong and Wei Huang)
Review of Development Economics, 20(1), 2016, pp. 25-38 [link]
"The Legacy of Nineteenth Century Treaties on the Current Trade of Chinese Cities" (with Keith Head, John Ries, and Junjie Hong)
Asia-Pacific Journal of Accounting & Economics, 22(3), 2015, pp. 251-270 [link]
"Exports, Ownership and Firm Productivity: Evidence from China" (with Junjie Hong)
The World Economy 34(7), 2011, pp. 1199-1215 [link]
Review of International Economics, forthcoming. [link]
"Exchange rate risk and trade mode choice in processing trade: Evidence from Chinese data" (with Zhe Chen and Junjie Hong)
Review of International Economics, 28(2) 2020, pp. 537-564 [link]
"Local institutions, Foreign Direct Investment and Productivity of Domestic Firms" (with Junjie Hong and Wei Huang)
Review of Development Economics, 20(1), 2016, pp. 25-38 [link]
"The Legacy of Nineteenth Century Treaties on the Current Trade of Chinese Cities" (with Keith Head, John Ries, and Junjie Hong)
Asia-Pacific Journal of Accounting & Economics, 22(3), 2015, pp. 251-270 [link]
"Exports, Ownership and Firm Productivity: Evidence from China" (with Junjie Hong)
The World Economy 34(7), 2011, pp. 1199-1215 [link]