RIEB Discussion Paper Series No.2022-20

Title

Export Capacity Constraints and Distortions

Abstract

We investigate how export capacity constraints (ECCs) affect resource misallocation and aggregate productivity by distorting the firm’s export mode. Using unique datasets in China, we first document a number of observed patterns for the socalled “dual-channel exporters”, which export only a fraction of their products directly with the rest via intermediaries. We show that introducing capacity constraints reconciles the theory with the observed patterns in the data. Our quantitative exercise suggests that removal of the ECCs leads to gains of 2.27% in aggregate productivity, 4.97% in total exports and 0.37% in national welfare.

Keywords

Dual-channel exporters; Capacity constraint; Distortion; Resource misallocation

JEL Classification

F10, O18

Inquiries

Xiao FENG
School of Economics, Nankai University

Yongjin WANG
School of Economics, Nankai University

Laixun ZHAO
Research Institute for Economics and Business Administration,
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059