Abstract

This paper estimates the effect of total factor productivity (TFP) and agglomeration on the choice of a firm to export directly or indirectly through an intermediary. Using Chinese firm-level textile industry data, we apply a spatial autoregressive probit model. We find agglomeration is several times more important than productivity for a firm choosing to export directly. The marginal effect of agglomeration, however, is decreasing as the number of neighbors increases beyond 10.

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