Pure exporter: Theory and evidence from China

Abstract

This article provides the first evidence about pure exporters (i.e. firms exporting all of their output to the foreign market) - a phenomenon overlooked and cannot be explained in the existing literature. It then offers a theoretical analysis of the existence and behaviour of pure exporters. In particular, pure exporters arise when the export market is sufficiently large - a situation more likely to hold in developing countries as opposed to large developed countries, and their productivity levels are above those of nonexporters, but below those of firms having both domestic sales and export. These theoretical predictions are borne out in a data of Chinese manufacturing firms for the period of 1998-2005. © 2014 John Wiley & Sons Ltd.