Huang Hanwei | Research on Firm Heterogeneity and Imperfect Competition in Global Production Network

On December 3, the 11th Annual Meeting of the China Council for the Study of International Trade (CTRG) was successfully held as part of the 2021 Academic Symposium on International Trade Disputes and the Restructuring of Globalization.Huang Hanwei, Assistant Professor, City University of Hong KongAttended and shared with collaborators(See the image below)TitleA Study on Firm Heterogeneity and Imperfect Competition in Global Production NetworksFirm Heterogeneity and Imperfect Competition in Global Production NetworksThe article.

Article author

Huang Hanwei holds a PhD from the London School of Economics and Political Science (LSE) and is currently an Assistant Professor in the Department of Economics and Finance at the City University of Hong Kong Business School, and a Research Fellow at the LSE Centre for Economic Operations and the Tsinghua University Center for International Finance and Economics. From 2018 to 2019, he conducted postdoctoral research at University College London. His main research areas are international trade, industrial organization theory, and development economics. His teaching areas include international trade, international finance, and macroeconomics. He serves as a reviewer for several international journals, and his research on the economic impact of Brexit has been well-received.Bloomberg、The Economist、Financial Times This has been reported by multiple media outlets. Current research focuses on global value chains, global production networks, and the economic impact of global pandemics.

Huang Hanwei

Huang Hanwei and his collaborators' article investigates the impact of firm heterogeneity and imperfect competition on global production networks and trade benefits. They construct a quantifiable model with the following characteristics: (i) heterogeneous buyers and sellers; (ii) matching frictions between buyers and sellers; and (iii) oligopolistic competition among sellers. Using micro-level production and trade data from Chinese and French firms, they provide evidence consistent with the model's predictions. When competition intensifies in the upstream Chinese market, downstream French buyers import more products from China at lower prices. This effect is stronger for larger, more productive French buyers; however, it weakens when Chinese sellers become more differentiated. Counterfactual analysis shows that lower upstream entry barriers, matching costs, and trade costs amplify downstream firm productivity and firm-size differences, increasing overall welfare. These effects work by improving buyer-supplier matching and reducing price markups. Therefore, global production networks enable industrial policies and trade liberalization to have a greater impact and international spillover effects.

Ma Hong

Professor Ma Hong of the Department of Economics at the School of Economics and Management, Tsinghua University, provided a brief commentary and analysis of this article.They also highly recognized Professor Huang's in-depth research on this important issue.Based on the content of the article, Teacher Ma raised three suggestions and questions:1. Should large buyers seek out large sellers or small sellers?2. Theoretical findings suggest that companies with higher productivity can purchase from more suppliers at lower prices; however, entry and associated costs are also important.3. Empirically, will Buyer 5 obtain lower prices and more sellers from HS-6 products?Finally, based on the content of the article, Teacher Ma raised three questions:1. Where is the network structure in our experience?2. They also do not match in terms of experience.For example:Are there any policy shocks that could potentially affect matching?3. Will we observe different patterns in similar countries?

CTRG attendees and scholars