Multi-product Firms and Export Skewness: Does Firm Size Matter?

ABSTRACT Using firm-level data on Egyptian multi-product exporters, this article studies how firms respond to a larger market size and greater competition in the destination country through adjusting their choice of product scope. Our main findings show that market size has a negative impact on the within-firm concentration index, reflecting that firms diversify their product portfolio in larger destinations. Tougher competition induces firms to drop some products, and their product mix becomes more skewed, especially for large exporting firms who tend to concentrate on products where they have a comparative advantage. Our results are less robust for small exporting firms.