Chenying Yang

Location Choices of Multi-plant Oligopolists: Theory and Evidence from the Cement Industry

Mon, 07 Aug 2023 00:00:00 +0000

This paper studies spatial interdependencies in multi-plant production. I develop a model in which each firm decides locations of plant set and variable markups where its plants sell. Such location decision is guided by two competing forces: amplification of a firm’s competitive advantage through plant expansion and diminishing marginal benefits due to cannibalization. Despite a combinatorial discrete choice problem, the model is estimated efficiently provided the location game is submodular and aggregative. With this framework, I investigate the spatial organization of cement firms responding to environmental policy changes, and show that neglecting the interdependencies biases the estimate of carbon leakage.

Rules of Origin and Automobile Parts Trade

Wed, 27 Jul 2022 00:00:00 +0000

Recent decades have witnessed the growing importance of trade in intermediate goods and pursuit of free trade agreements (FTAs). They distort firms’ sourcing decisions internationally through preferential tariffs and rules of origin (RoOs), a set of criteria that define the origin of a product to qualify for preferential access. The paper distinguishes trade diversion through RoOs from tariff reduction on intermediate goods, focusing on the automotive industry. Car assemblers’ decisions of how much to acquire from which supplier are modeled for every auto part. With the derived gravity trade equation, the estimation identifies significant diversion in intermediate sourcing and the effect is nonlinear with respect to the restrictiveness of RoOs. The shift from foreign to regional inputs exhibits a humped shape and it peaks when the required minimum FTA content is between 50% and 60%. Impacts of RoOs are further decomposed to four channels: export destinations of final goods, magnitude of preferential treatments, price and cost penalty of intermediate goods. Results show that the RoO effects are stronger when car exports are mainly intra-FTA. However, there are mixed forces driving the effects of preferential tariff margins of cars and values of parts.

Industrial Policies for Multi-stage Production: The Battle for Battery-powered Vehicles

Fri, 28 Apr 2017 00:00:00 +0000

We study whether consumer taste is biased towards beer brands originated from countries where the ancestors of consumers came. The empirical analysis takes advantage of a single Chicago-area grocery store chain, Dominick’s, having stores located at census tracts with different ethnic background composition. Combining the sales data at store-UPC level controlling for prices and brand offerings with 173 beer brands’ origin information scraped from one of the most visited beer online platform, we find significant home bias in consumption. The result sheds light on why this grocery chain has its market share plummeted after it was taken over by Safeway and replaced with house branded products.

Key Indicators for Asia and the Pacific 2016

Sun, 27 Nov 2016 00:00:00 +0000

Optimal Rules of Origin and Multilateral Negotiation

Thu, 28 Apr 2016 00:00:00 +0000

Key Indicators for Asia and the Pacific 2015

Tue, 27 Oct 2015 00:00:00 +0000

Licensing versus Internalization of Branded Beer

Mon, 27 Apr 2015 00:00:00 +0000

One of the central questions revolving multinational firm theory is whether firms choose to internalize or engage in arm’s length licensing when entering a foreign market. Decisions on firm boundaries become more complicated when firms carry more than one brand and multiple stages of operation before reaching consumers. This paper compares two approaches in the literature concerning a multinational firm’s organization of foreign operation, namely the transaction-cost theory and property-rights theory. The two differ in whether efficiency losses from incomplete contracts are endogenous and whether they are of the same nature even for integrated relationships. Two models yield opposite predictions which open the door for empirical investigation that I test using a unique brand-market level data in the beer industry. I empirically characterize the optimal allocation of ownership rights by brand quality, contractual environment, market size, competition structure, and the existed band portfolio of the licensor and licensee. Results support the property-right theory for beer companies. I also overcome the data limitation on licensing agreements and develop an innovative way to infer contractual relationship by combining brands’ ownership information at the national and global level.

GVC Development Report: Beyond Production

Sun, 27 Nov 2011 00:00:00 +0000

Mon, 01 Jan 0001 00:00:00 +0000