Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 20, 2020 erstellt
Beschreibung:
This paper studies how distortions alter decisions of firms in producing multiple products (MP). Using the Annual Survey of Industrial Firm data in China, we find (i) multi-product firms are fewer and smaller than in the U.S.; (ii) the MP probability of a firm is negatively associated with the level of distortions. We build discrete product choices into a heterogeneous firm model à la Melitz (2003). A tax-like distortion increases the productivity cutoff of an MP firm, and vice versa for a subsidy-like distortion. The model is calibrated to firm-level data of China and the U.S. When distortions are removed, we find a comparable magnitude of welfare gains from the product extensive margin and from firm entry and exit. Both gains are sizable by the general equilibrium forces interacted with the granularity of firm size distributions