Geeta Batra

Firm size and the pattern of diversification

Abstract In this paper, the entry of firms into the foreign market is treated as a form of diversification that is an alternative to the more conventional form of product diversification. We develop a firm-level total index of diversification which comprises of product-line and geographical diversities. Using semi-parametric regression techniques, we analyze the relationship between various forms of diversification and firm size in five major manufacturing industries in Taiwan. Our findings indicate that diversification need not be solely a large firm phenomenon as observed in developed countries. Among small and medium firms, the most common form of diversification consists of diversifying into a different geographical market. The positive relation between firm size and product diversification typically found in developed countries is limited to large exporting firms in Taiwan.

Firm heterogeneity and export–domestic price differentials: A study of Taiwanese electronics products

Abstract This paper uses firm-level data to determine if there are systematic differences in the export and domestic prices charged by Taiwanese electronics producers. The analysis exploits new micro data that allow us to measure firm-level prices in both the domestic and export market for each of 30 disaggregated products in 1986 and 24 products in 1991. We find a substantial difference in the average domestic and export price of most products but trace much of the difference to heterogeneity in prices across firms in the same product market. Once this firm-level heterogeneity is accounted for, statistically significant price differences between the export and domestic market are found for seven products in 1986, with the domestic market price always being higher. The largest price differences are found for consumer electronics products where there were significant import restrictions. By 1991, when all import restrictions had been relaxed, the export–domestic price differential narrows, often substantially, for 18 of the 24 products where comparisons are possible. Statistically significant price differences are found for only one product in 1991. The pricing patterns are consistent with price discrimination in some product markets with the discrimination supported by trade restrictions that raised domestic prices. The magnitude of price variability across firms in the same product market also provides further evidence of the danger of using market-level aggregates to infer competitiveness.

Technology, Exports And Firm Efficiency In Taiwanese Manufacturing

Using firm-level data from the 1986 Census of Manufactures of Taiwan, we examine the links between technical efficiency and firm investments in technology and exports. Stochastic production frontier techniques are used to estimate the technical efficiency of firms by investments in technology as well as by export orientation. Our results indicate that accounting for firm investments in technology is critical in explaining the strong export-productivity link in the extant literature. For the group of large, high technology firms, the differences in the mean efficiencies between exporters and non-exporters are not significantly different than zero in all nine industries under study. However, for the large number of small firms that make no formal investments in technology. exporters are significantly closer to the production frontier than their counterparts that sell in the domestic market.