UBC Theses and Dissertations

UBC Theses Logo

UBC Theses and Dissertations

How Chinese firms link with foreign markets Sun, Xiaonan


This dissertation consists of three essays, each of which studies a unique perspective of how Chinese firms participate in foreign markets. The first essay investigates a government regulation that restricts the use of intermediaries linking domestic producers and foreign buyers. A model is developed to describe the matches between automakers and intermediaries. It shows that the regulation leads to market division, inefficiencies in matching, and double marginalization. The model predictions coincide with a number of stylized facts: a strong decline in the number of auto intermediaries, assortative matching, export price increases for intermediaries, and substantial churning in the sets of intermediaries registered by the automakers. Welfare analysis shows that this regulation benefits automakers while intermediaries are made worse off. The second essay studies the sales allocation of Chinese exporters between domestic and foreign markets. The exports to domestic sales ratio is decreasing in firm productivity. Heterogeneous marketing cost elasticities are introduced in the model to rationalize this empirical phenomenon. A higher marketing cost elasticity domestically gives rise to a larger sales expansion in the home market as firm productivity increases. Empirical tests of the model predictions provide evidence to support the role of marketing costs and are inconsistent with alternative explanations related to variable markups and product quality. The third essay examines the persistence of trade relationships from a historical point of view. It studies the effect of treaty linkages established between Chinese cities and foreign countries during the 19th century on China's trade today. Evidence shows that trade is higher among the group of countries and cities that were involved in treaty arrangements. These higher levels of trade may be due to complementary in industry structure and business knowledge developed in the treaty port era. An alternative explanation is that today's trade is due to the relatively high levels of development of the trading partners and is unrelated to treaty ports.

Item Media

Item Citations and Data


Attribution-NonCommercial-NoDerivatives 4.0 International