A Structural Model of Demand, Cost, and Export Market Selection for Chinese Footwear Producers

Abstract

In this paper we use micro data on both trade and production for a sample of large Chinese manufacturing …rms in the footwear industry from 2002-2006 to estimate an empirical model of export demand, pricing, and market participation by destination market. We use the model to construct indexes of …rm-level demand, cost, and export market pro…tability. The empirical results indicate substantial …rm heterogeneity in both the demand and cost dimensions with demand being more dispersed. The …rm-speci…c demand and cost �

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