Zhang, D., Navas, A. and Gregory-Smith, I. (2023) Comparative advantage and the quality choice of heterogeneous firms. Working Paper. Sheffield Economic Research Paper Series, 2023022 (2023022). Department of Economics, University of Sheffield ISSN 1749-8368
Abstract
This paper examines how trade openness affects firms’ product quality across industries based on a country’s comparative advantage. We develop a Heckscher-Ohlin model with heterogeneous firms and endogenous quality upgrading. Trade openness affects a firm’s product quality differ- ently within an industry based on the firm’s export status. In particular, trade openness increases exporters’ product quality and reduces the quality from non-exporting firms. These effects are not homogeneous across industries; they are more pronounced in a country’s comparative advan- tage industry. We test the main predictions of the model using transaction-level data of Chinese exports. Consistent with our theoretical predictions, we find that Chinese exporters export higher quality products in those industries in which China reveals a comparative advantage.
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 The Author(s). For reuse permissions, please contact the Author(s). The Sheffield Economic Research Paper Series (SERPS) offers a forum for the research output of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by two internal referees and a departmental editor. However, the contents and opinions expressed remain the responsibility of the author(s). Comments are welcomed and should be addressed to the individual author(s). |
Keywords: | Heterogeneous Firms; Product Quality; Comparative Advantage |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 08 Dec 2023 12:17 |
Last Modified: | 08 Dec 2023 12:18 |
Published Version: | https://www.sheffield.ac.uk/economics/research/ser... |
Status: | Published |
Publisher: | Department of Economics, University of Sheffield |
Series Name: | Sheffield Economic Research Paper Series |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:206264 |