Time: 15:30 -- 17:00, December 16

Location: 1610, Rear Main Building

Speaker: Zhang Rui (Aarhus University, Denmark)

Moderator: Dai Mi (Beijing Normal University)

Topic：Market Interdependence Through Shared Suppliers: Theory and Evidence from Termination of the Multifiber Arrangement

Abstract：Leveraging the event of quota lifting by members of Multifiber Arrangement in 2005, we use a difference-in-differences design that compares firm-level Chinese exports of the previously-capped and uncapped products to the countries outside of the MFA. We find strong evidence of market interdependence empirically. The quota removal led to a significant decrease in the exports of MFA-capped products. The suppliers with dampened sales either increased sales in the liberalizing markets or entered them for the first time. We interpret these findings in a multi-country trade model with increasing marginal cost of production. In the model, the marginal cost rises when firms begin to serve markets with growing demand, resulting in a fall in sales in, or even exit, from the countries outside of the MFA. We derive welfare changes in the exporter country, accounting for changes in marginal costs. Our analysis suggests that gains from trade liberalization in the participating countries may come at the expense of the others.

Personal Profile: Zhang Rui is assistant Professor in the Department of Economics and Business Economics, Aarhus University BSS, Department of Business and Social Sciences, Denmark.  In 2019, He graduated from The China Center for Economic Research at The National School of Development of Peking University with a PhD in Economics. His research interests include international economics, space economics, development economics and Chinese economy. He has published more than 10 papers in Economic Research, Management World, Economics (Quarterly), Financial Research, Review of Development Economics and other journals.  He was awarded the "Top ten Papers" of World Economic Yearbook, the best Doctoral thesis of RMET conference and EIIT Conference held by FREIT.