Speaker: Prof. Zhang Rui, Sun Yat-sen University

Host: Prof. Yu Changhua, National School of Development

Time: 10:30-12:00 pm, December 13, 2022, GMT+8

Venue: Zoom Meeting ID: 926 3889 7210 Passcode: 908060

Abstract:

We study the direct effect of a unilateral trade liberalization episode on the third-market economies who share the same set of suppliers as the liberalizing economy. Exploring the lifting of the Multi-Fibre Arrangement quotas on textile and apparel products in 2005, we provide new evidence of market interdependence: Upon the quota lifting, Chinese textile and apparel exporters exhibit strong “export reallocation” by increasing exports of quota-capped products to destinations lifting quotas, and decreasing exports of the same products to destinations that never imposed quotas. We interpret these findings in a model with increasing-marginal-cost production and export market participation decisions. The model features a direct “third-market” spillover effect and a welfare statistic adjusting for changes in marginal costs of the shared suppliers. Our estimation confirms strong increasing marginal cost and suggests sizeable adverse welfare effects of the quota lifting on the third-market economies.

Biography:

Rui Zhang (Ray) is currently an associate professor at Sun Yat-Sen University, Business School. He received his PhD in Economics from National School of Development, Peking University in 2019. He worked as an assistant professor at the Department of Economics and Business Economics, Aarhus University in Denmark from Fall 2019 to Fall 2022. His research interests are International Trade and Spatial Economics. His research papers appeared on The Economic Journal, Economic Modelling, 《经济研究》, 《管理世界》, 《经济学（季刊）》, 《世界经济》, 《金融研究》.

Source: National School of Development