IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v35y2015icp33-46.html
   My bibliography  Save this article

Multi-product firms, product scope, and the policy of export tax rebate

Author

Listed:
  • Tan, Yong
  • Han, Jian
  • Ma, Yeqing

Abstract

This paper extends the model of Nocke and Yeaple (2014) to analyze the impact of the export tax rebate (ETR) changes on multi-product firms' product scope. In response to ETR changes, firms optimally reallocate their organizational capital, and adjust the intensive and extensive margins of production. We test the model's predictions using firm-level export and ETR data from China. We find that less profitable products, facing larger ETR reductions, and products in which China has a comparative disadvantage, are more likely to be dropped.

Suggested Citation

  • Tan, Yong & Han, Jian & Ma, Yeqing, 2015. "Multi-product firms, product scope, and the policy of export tax rebate," China Economic Review, Elsevier, vol. 35(C), pages 33-46.
    • Handle: RePEc:eee:chieco:v:35:y:2015:i:c:p:33-46
    DOI: 10.1016/j.chieco.2015.05.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X15000620
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2015.05.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thierry Mayer & Marc J. Melitz & Gianmarco I. P. Ottaviano, 2021. "Market Size, Competition, and the Product Mix of Exporters," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 5, pages 109-150, World Scientific Publishing Co. Pte. Ltd..
    2. Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May.
    3. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    4. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2010. "Multiple-Product Firms and Product Switching," American Economic Review, American Economic Association, vol. 100(1), pages 70-97, March.
    5. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2011. "Multiproduct Firms and Trade Liberalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(3), pages 1271-1318.
    6. Carsten Eckel & J. Peter Neary, 2010. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(1), pages 188-217.
    7. Ma, Yue & Tang, Heiwai & Zhang, Yifan, 2014. "Factor Intensity, product switching, and productivity: Evidence from Chinese exporters," Journal of International Economics, Elsevier, vol. 92(2), pages 349-362.
    8. Manova, Kalina & Yu, Zhihong, 2017. "Multi-product firms and product quality," Journal of International Economics, Elsevier, vol. 109(C), pages 116-137.
    9. repec:hal:spmain:info:hdl:2441/6g0gsihsjmn5snc9pb0jo6hhp is not listed on IDEAS
    10. repec:dau:papers:123456789/13784 is not listed on IDEAS
    11. Chandra, Piyush & Long, Cheryl, 2013. "VAT rebates and export performance in China: Firm-level evidence," Journal of Public Economics, Elsevier, vol. 102(C), pages 13-22.
    12. Catherine Fuss & Linke Zhu, 2012. "Comparative advantage, multi-product firms and trade liberalisation : An empirical test," Working Paper Research 219, National Bank of Belgium.
    13. Nocke, Volker & Yeaple, Stephen, 2008. "Globalization and the Size Distribution of Multiproduct Firms," CEPR Discussion Papers 6948, C.E.P.R. Discussion Papers.
    14. repec:wyi:journl:002196 is not listed on IDEAS
    15. Julien Gourdon & Stéphanie Monjon & Sandra Poncet, 2014. "Incomplete VAT rebates to exporters : how do they affect China's export performance?," Working Papers 2014-05, CEPII research center.
    16. Chao, Chi-Chur & Chou, W. L. & Yu, Eden S. H., 2001. "Export Duty Rebates and Export Performance: Theory and China's Experience," Journal of Comparative Economics, Elsevier, vol. 29(2), pages 314-326, June.
    17. Volker Nocke & Stephen Yeaple, 2014. "Globalization And Multiproduct Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 993-1018, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hu, Cui & Tan, Yong, 2017. "Learning to Import From Neighbors," MPRA Paper 78108, University Library of Munich, Germany.
    2. Sun, Churen & Wu, Han, 2023. "The impact of export VAT rebate on firm-product markups: Evidence from Chinese industrial enterprises," Economic Modelling, Elsevier, vol. 119(C).
    3. Cui Hu & Faqin Lin & Yong Tan & Yihong Tang, 2019. "How exporting firms respond to technical barriers to trade?," The World Economy, Wiley Blackwell, vol. 42(5), pages 1400-1426, May.
    4. L. An & C. Hu & Yong Tan, 2017. "Regional effects of export tax rebate on exporting firms: Evidence from China," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 774-798, September.
    5. Liu, Lihua & Cao, Lele & Cao, Yuqiang & Lu, Meiting & Shan, Yaowen, 2024. "VAT credit refunds and firm productivity: Evidence from China's VAT reform," International Review of Financial Analysis, Elsevier, vol. 93(C).
    6. Bingqiang Li & Xi Li & Jinzhi Li & Hongchun Lin & Baojuan Rui, 2023. "Empirical Analysis of Export Tax Rebate on Inwards Foreign Direct Investment in China," SAGE Open, , vol. 13(4), pages 21582440231, December.
    7. Chen, Lili & Guo, Shaoyu & Lu, Jian & Gerschewski, Stephan, 2021. "Outward FDI and efficiency in within-firm resource allocation – Evidence from firm-level data of China," Journal of Asian Economics, Elsevier, vol. 74(C).
    8. HUR, Jung & YOON, Haeyeon, 2018. "Product Dynamics and Trade Liberalization: Evidence from the Korea-US FTA," Discussion paper series HIAS-E-82, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    9. Xu, Zhiwei & Wen, Qiang & Zhang, Teng, 2023. "Trade policy and air pollution: Evidence from the adjustment of the export tax rebate in China," Economic Modelling, Elsevier, vol. 128(C).
    10. Jing Yan, 2017. "Privatisation and trade performance: evidence from China," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 31(1), pages 66-78, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ma, Yue & Tang, Heiwai & Zhang, Yifan, 2014. "Factor Intensity, product switching, and productivity: Evidence from Chinese exporters," Journal of International Economics, Elsevier, vol. 92(2), pages 349-362.
    2. Daniel Baumgarten & Michael Irlacher & Karin Mayr‐Dorn, 2022. "Internationalization strategies of multi‐product firms: The role of technology," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(4), pages 1929-1965, November.
    3. Arnarson, Björn Thor, 2020. "The superstar and the followers: Intra-firm product complementarity in international trade," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 277-304.
    4. Forslid, Rikard & Okubo, Toshihiro, 2023. "Trade, location, and multi-product firms," Regional Science and Urban Economics, Elsevier, vol. 100(C).
    5. Macedoni, Luca, 2022. "Large multiproduct exporters across rich and poor countries: Theory and evidence," Journal of Development Economics, Elsevier, vol. 156(C).
    6. Lopresti, John, 2016. "Multiproduct firms and product scope adjustment in trade," Journal of International Economics, Elsevier, vol. 100(C), pages 160-173.
    7. Michael Irlacher, 2022. "Multi-product Firms in International Economics," Economics working papers 2022-01, Department of Economics, Johannes Kepler University Linz, Austria.
    8. HUR, Jung & YOON, Haeyeon, 2018. "Product Dynamics and Trade Liberalization: Evidence from the Korea-US FTA," Discussion paper series HIAS-E-82, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    9. Erbahar, Aksel & Rebeyrol, Vincent, 2023. "Trade intermediation by producers," Journal of International Economics, Elsevier, vol. 140(C).
    10. Békés, Gábor & Muraközy, Balázs, 2012. "Temporary trade and heterogeneous firms," Journal of International Economics, Elsevier, vol. 87(2), pages 232-246.
    11. Meng, Ning & Milner, Chris & Song, Huasheng, 2020. "Antidumping and heterogeneous quality adjustment of multi-product firms: Evidence from Chinese exporters," Economic Modelling, Elsevier, vol. 92(C), pages 147-161.
    12. R. Monin & M. Suarez Castillo, 2020. "Product switching, market power and distance to core competency," Documents de Travail de l'Insee - INSEE Working Papers g2020-06, Institut National de la Statistique et des Etudes Economiques.
    13. Eckel, Carsten & Iacovone, Leonardo & Javorcik, Beata & Neary, J. Peter, 2015. "Multi-product firms at home and away: Cost- versus quality-based competence," Journal of International Economics, Elsevier, vol. 95(2), pages 216-232.
    14. Hartmut Egger & Michael Koch, 2011. "Labor Unions and the Scale and Scope of Multi-Product Firms," Working Papers 097, Bavarian Graduate Program in Economics (BGPE).
    15. Ariu, Andrea & Mayneris, Florian & Parenti, Mathieu, 2020. "One way to the top: How services boost the demand for goods," Journal of International Economics, Elsevier, vol. 123(C).
    16. Volker Nocke & Stephen Yeaple, 2014. "Globalization And Multiproduct Firms," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 993-1018, November.
    17. Letizia Montinari & Massimo Riccaboni & Stefano Schiavo, 2021. "Innovation, trade and multi‐product firms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 311-337, February.
    18. Filippo Bontadini & Mercedes Campi & Marco Due~nas, 2023. "Being at the core: firm product specialisation," Papers 2302.02767, arXiv.org, revised Mar 2023.
    19. Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2018. "The variation of export prices across and within firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(2), pages 327-346, May.
    20. Zhuoran Bai & Shuang Meng & Zhuang Miao & Yan Zhang, 2023. "Liberalization for services foreign direct investment and product mix adjustment: Evidence from Chinese exporting firms," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 363-388, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:chieco:v:35:y:2015:i:c:p:33-46. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/chieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.