Foreign Competition along the Quality Ladder
研究发现低价企业受低成本竞争冲击更大，提出一个包含随机系数需求和内生产品质量的贸易模型，解释企业通过质量升级应对竞争的“逃避竞争”效应，并量化中国冲击对不同价格层级企业的差异化影响。
Abstract We document that firms with low prices are more impacted by low-cost competition. To explain this pattern, we propose an empirical model of trade with random-coefficient demand and endogenous product quality. Unlike commonly used demand systems (e.g., constant elasticity of substitution, nested logit), this model generates rich substitution patterns and implies an ‘escape-competition’ effect: in response to low-cost competition, firms have an incentive to upgrade their product quality. The estimation of the model reveals significant heterogeneity in consumer preferences. Counterfactual experiments suggest that the ‘China shock’ was significantly more damaging to firms at the bottom of the price distribution, and that quality upgrading had a limited role at mitigating the shock.