A Study On The Welfare Effect Of China's Manufacturing Imported Variety

Exploring trade welfare has always been a core issue of international trade.Traditional trade theories emphasize that trade welfare is division of labor and exchange.The new trade theory extended trade welfare to the decline in firm pricing power,product diversification and increasing returns to scale.Product diversification can improve consumer welfare.The theory of endogenous growth and the New-New trade theory studied the relationship among international trade,variety,productivity,and resource allocation efficiency from the perspective of the producer,enriching the theoretical basis of variety and trade welfare.Therefore,the imported variety not only improves consumer welfare by meeting the diversified demands of consumer,but also increases producer welfare by increasing firm productivity and improving firm resource allocation the efficiency.Since China's accession to the WTO,China's manufacturing imported variety has continued to increase with import volumes growth.While the imported variety continues to increase,what is Armington micro elasticity of substitution of the imported variety? How does the imported variety affect consumer welfare and producer welfare in China? What are the impact mechanisms? Studying these issues have great practical significance for scientifically grasping the welfare effect of the increase of the imported variety in China in recent years,and for formulating policies of the imported variety that improve the welfare of producer and consumer.Focusing on the above issues,this paper comprehensively adopts comparative analysis,combination of qualitative and quantitative research methods,and follows the research ideas of theoretical foundation,stylized facts analysis,mechanism exploration,empirical test,and policy recommendations to study the impact of the imported variety on consumer welfare and producer.welfare?This paper consists of seven chapters.The first chapter is the introduction,which mainly includes the background and significance,the current research status of domestic and foreign,the structure,the research methods and the innovation.The second chapter is the definition of the basic concepts and the theoretical basis.It mainly defines the important concepts in this topic,and analyzes the relevant theories related to the imported variety and welfare.The third chapter examines typical characteristics of China's manufacturing trade.First of all,it analyzes the change of in China's manufacturing trade volumes,market structure,and industries structure during the period 2000-2013.Secondly,it analyzes China's manufacturing industries Change of the imported variety during the period 2000-2013 from overall and structural perspective.The fourth chapter measures consumer welfare from the China's manufacturing imported variety.First of all,theoretically analyzing the mechanism of the imported variety which affects consumer welfare.Then,the methods of measuring the welfare of the imported variety are introduced,including the measurement of two price indexes and welfare change under the unchanged quality and changed quality of the imported manufacturing products,and Armington micro elasticity of substitution measurement.Finally,estimating the Armington micro elasticity of substitution of China's manufacturing industry.Based on the estimations of Armington micro elasticity of substitution,this paper respectively measures the welfare from the imported variety from the overall and structure.The fifth chapter studies the impact of China's manufacturing imported variety on firm productivity.First of all,theoretically analyzing the mechanism of the imported variety that affects firm productivity.Follow,building a measurement model that tests the impact of the imported variety on firm productivity based on China's industrial firm data and customs transaction data during 2000-2013,Further,this paper tests whether the impacts will be varied because of firm heterogeneity.Finally,this paper tests the imported variety affects the mechanism of firm productivity.The sixth chapter studies the impact of China's manufacturing the imported variety on firm markup dispersion.First of all,theoretically analyzing the mechanism of the imported variety that affects firm markup dispersion.Then,this paper builds econometric model using difference in difference and the instrumental variable identification,which studies the impacts of the imported variety on firm markup dispersion based on China's industrial firm database and customs transaction database during 2000-2007.Furthermore,this paper tests whether the impact will be varied because of firm heterogeneity.Finally,this paper tests that imported variety affects the mechanism of firm markup dispersion.Through theoretical and empirical research,the conclusions are as follows:Firstly,there is a significant difference in the HS-6 Armington micro elasticity of substitution of China's manufacturing.Based on the imported variety of both the unchanged quality and the changed quality,the growth of manufacturing imported variety has contributed to increasing the welfare.At the same time,the magnitude of increasing welfare in the changed quality is more than that in the unchanged quality.Structurally,In addition to manufacture of tobacco products,the welfare of the other19 industries are increased.Considering unchanged quality,the welfare from transportation equipment manufacturing imported variety is most.Considering changed quality the welfare from manufacture of basic metals imported variety is most.From the point of view of BEC Products,the imported variety of most industries increases the welfare,which processed industrial supplies increased the most.From the perspective of HS-6-level products,the result shows that China's manufacturing growth of the impored variety showed significant benefits of central tendency,which “unwrought metal” welfare increases most.Secondly,the growth of the imported variety has increased China's manufacturing firm productivity.The empirical results of firm heterogeneity show that the imported variety has a positive impact on different type firm productivity,but the degree of impact varies.The imported variety has a greater effect processing trade firm productivity than general import trade.The imported variety has a greater effect on firm productivity in western regions than in the other regions.The imported variety has a greater effect on the productivity of imported intermediate products than on the imported capital and consumer products.The imported variety promotes the import of high technology firm,which is significantly higher than that for imported low-medium technology firm.This paper also finds that the mechanism of the imported variety affecting firm productivity shows that the imported variety increases firm productivity through competition effect and technology-spillover effect.Thirdly,the imported variety has significantly reduced China's manufacturing firm markup dispersion,and improved firm resource allocation efficiency.In addition,the imported variety has heterogeneity impact on the firm markup dispersion.The imported variety in high technology and low-medium technology has negative effect on firm markup dispersion.The imported variety has more negative effect on firm markup dispersion in high technology than low-medium technology.The imported variety significantly reduces firm markup dispersion in the general trade,but has no effect on firm markup dispersion in the processing trade.The imported variety significantly reduces firm markup dispersion in the eastern and western,and has a greater impact on firm markup dispersion in the western region.The firm markup dispersion in the middle region has not significantly the effect.The imported variety significantly reduces firm markup dispersion in low competition industries,but does not significantly reduce firm markup dispersion in high competition industries.The imported variety significantly reduces the firm markup distribution for intermediate product imports,but does not significantly reduce the firm markup dispersion for capital goods.Furthermore,mechanism test shows that the imported variety affects the firm markup dispersion through firm productivity dispersion and firm price dispersion.In other words,there are obvious price distribution effect and marginal cost distribution effect.