Import liberalization and export product mix

The file attached to this record is the author's final peer reviewed version.This paper develops a monopolistic competition model of multiproduct firms to explain the effect of trade liberalization on the product mix of multiproduct exporting firms. The model shows that input-tariff reduction leads to increases in a firm’s export values, especially for products that are farther from a firm’s core competency. To test the theoretical predictions, we use the merged data built upon the highly disaggregated Chinese firm-level production data and customs data for 2000-2006. Consistent with the theory, the positive impact of input trade liberalization on export value is found to be more pronounced for peripheral products, and input-tariff reduction also expands a firm’s product scope, affecting firm’s average productivity