Essays on international economics

This dissertation consists of three chapters. The first chapter examines how the export intensity of Chinese firms is related to their productivity, and finds a negative correlation within exporting firms. This pattern remains robust even when controlling for ownership, trade mode, factor intensity, and export subsidies. Firms have to pay marketing costs in order to reach customers. If the elasticity of these costs, with respect to the number of consumers in the domestic market, is higher than in foreign markets, then more productive firms sell relatively more in the domestic market compared with low-productivity firms. Using the marketing cost framework, this chapter further estimates the elasticity of marketing costs in each market and then uses local market competition to explain the heterogeneity in elasticity across markets. When competition is tougher in a market, elasticity is higher there. The second chapter investigates the exchange rate pass-through differences in import prices between two trade modes and finds some robust empirical patterns. First, Chinese-owned assembly firms bear higher exchange rate pass-through than multinational firms. However, joint-owned and foreign-owned assembly firms bear less. Second, the exchange rate pass-through is greater when firms import materials from developed countries. Third, assembly firms can bear higher exchange rate pass-through if they have higher market shares or import less inputs. Finally, high financial development is helpful for assembly firms to bear higher exchange rate pass-through. The last chapter discusses the impact of China's rare earth policy on downstream industries. When China implemented the tough restriction on rare earth exporting in 2010, it caused a significant price gap between the domestic market and foreign markets. Therefore, downstream industries in China enjoy cost advantages relative to foreign competitors. First, this policy has led a rapid increase in exports of Chinese rare earth downstream firms relative to other Chinese firms. The increase of exports is mainly due to the price rather than quantity. Second, this chapter focuses on a typical downstream product -- magnets, and finds that the exports of Chinese metal permanent magnet also increase faster than exports of other countries.Arts, Faculty ofVancouver School of EconomicsGraduat