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Emerging Trade Battlefield with China: Export Competition and Firm’s Coping Strategies

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  • Nilsson Hakkala, Katariina
  • Pan, Yao

Abstract

This paper analyzes how intensified Chinese export competition affects the exports and product ranges of firms from Finland. Using a novel identification strategy that exploits changes in Chinese export policies, we find that Chinese export competition reduces aggregate product-level exports. Firm-level analysis further shows that Chinese competition leads to substantial price cuts to retain market shares, especially for homogeneous products. In addition, we also discover that firms respond to the increased level of Chinese export competition by dropping their marginal products. Taken together, these results highlight the importance of export competition with China for developed countries.

Suggested Citation

  • Nilsson Hakkala, Katariina & Pan, Yao, 2019. "Emerging Trade Battlefield with China: Export Competition and Firm’s Coping Strategies," ETLA Working Papers 71, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:wpaper:71
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade flows; Export competition; Firm-level; Product mix; China;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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