Faculty of Business Administration
Visiting Scholar Seminar
Firms’ choices of price, quality, product scope, and consequences of trade in an open economy: Evidence from China
Prof. LI Jie
Institute of Industrial Economics
Date: 14 December 2020 (Monday)
We outline a model of endogenous choices of product scope as well as prices, quality, and output per product in a partial-equilibrium model of heterogeneous firms with arbitrary productivity. These choices depend on market characteristics including variable trade and fixed entry costs. The extent to which firms respond to shocks depends on their (potentially nonparametric) density around the zero-profit threshold. Accordingly, identical changes in, e.g., variable trade costs per product and market lead to vastly different responses across not only markets and products but also firms. We shed light on the heterogeneity of these responses by estimating parameters and otherwise calibrating the model to firm-and-product-level bilateral trade data for China.
Prof. Li is the director of Industrial Organization and Regulation at Jinan University. He is an active and productive economist, recently publishing in various mainstream economics and finance journals such as Journal of International Money and Finance, Journal of Comparative Economics, China Economic Review, The World Economy, Southern Economic Journal, Review of Development Economics, International Review of Economics and Finance, Pacific-Basin Finance Journal, Emerging Markets Review, etc.