Trade Policy Uncertainty And The Domestic And Foreign Sales Behavior Of Heterogeneous Enterprises:Theoretical Mechanism And Empirical Test

In recent years,with the occurrence of a series of events such as Trump's appointment as US President,Brexit of the United Kingdom and trade disputes between China and the United States,the wave of anti-globalization has emerged one after another.The global economic and political environment has become more complex and full of uncertainty,which makes Chinese enterprises need to focus on the impact of trade policy-related uncertainties on trade in the process of foreign trade and the expanding of opening up.It is worth noting that the change of trade policy uncertainty will not only affect the export behavior of enterprises,but also affect the entry behavior of the domestic market and trade welfare effect.The problem is that,when analyzing the trade behavior of enterprises and trade welfare effect,the existing relevant literature generally assumes that economic resources will naturally be optimally allocated under the existing market structure,and simplifies the pre-existing system or policy of the domestic market,which will likely ignore the important impact of the changes of trade policy uncertainty on trade under this intervention.An enterprise of a country may engage in export and domestic sales activities.And the pre-existing domestic market structure and trade system characteristics will often make the relationship between export and domestic sales more complicated,which is bound to interact with the changes of uncertainty environment and in turn triggers the impact of trade policy uncertainty on the domestic and foreign sales behavior.In this paper,a heterogeneous enterprise trade model under an uncertain environment is established to prove that trade policy uncertainty can significantly change the export and domestic sales behavior of enterprises,which reveals that trade policy uncertainty has an impact on the domestic and foreign market choice behavior of heterogeneous enterprises.Due to the existing domestic trade policies in a country,while weighing the choice between "export now" and "waiting for export",the enterprises in the model are also faced with the question of whether to choose "deviation from export" or "non-deviation from export".On the one hand,the reductions of trade policy uncertainty will improve the opportunity cost of "waiting for deviation" of domestic and foreign sales relations of some inefficient enterprises in the industry,and encourage such enterprises to increase exports at the expense of domestic sales,which can directly strengthen the substitution relationship of domestic and foreign sales of enterprises.Onthe other hand,it will increase the opportunity cost of "waiting for non-deviation from export" of some high-efficiency enterprises in the industry,and promote such enterprises to indirectly strengthen the substitution relationship of domestic and foreign sales of such enterprises through general equilibrium effect.This paper uses Chinese micro-enterprise data,quantitative indicators of trade policy uncertainty and constructs a difference-in-differences model to test the theoretical mechanism,and alleviates potential endogenous problems in regression from aspects such as missing variables,measurement errors and reverse causality.The test results found that the impact of trade policy uncertainty on the heterogeneous enterprises' domestic and foreign sales behavior is very significant in both economic and statistical significance,which provides a solid empirical support for the main prediction of the model.This paper provides a reference for in-depth understanding of the resource allocation behavior of enterprises in "two markets" the domestic and foreign market in an uncertain environment,and believes that the simultaneous implementation of internal reform and external opening is crucial to ensure the optimal trade welfare effects.