Market Penetration and Trade Liberalization: Micro Evidence through Trademarks

Speaker：JING Ran（Professor, School of International Trade and Economics，UIBE）

Host：LI Bing（Associate Professor, Lingnan College）

Time and Date：16:00-18:00, May 26, 2021

Venue：Ip. P. Ting Conference Room, Lingnan Hall

Language：Chinese + Englisha

Abstract:

This paper applies the framework from Arkolakis (2010) to study Chinese firms' behavior on market penetration. In this framework other than prices, firms endogenously choose how much efforts they spend on market penetration. The model predicts that as a country's output tariff reduces, more firms start exporting and previous exporters export more triggered by their better position in the labor market, as domestic firms' outputs reduce driven by import competition. All firms adjust their marketing efforts, measured the trademarks that they hold domestically and overseas. We take Chinese firms' overseas trademarks to establish the effect that market penetration takes in channeling trade liberalization to international trade. Making use of China's accession to the WTO in 2001, we provide clear empirical evidence for the model prediction. Chinese firms in sectors with larger import tariff reductions apply for more foreign trademarks.