Sifan Xue

Abstract

We show empirically that it is a firm’s superstar products, rather than its product scope or average product appeal, that make it a superstar exporter. These superstar products account for more than half of aggregate sectoral exports. We build a multiproduct firm model with endogenous firm-level investment that shapes the distribution of product appeal. Higher-ability firms invest more as they benefit more from such investments, and are therefore more likely to generate superstar products. We show that the aggregate trade elasticity, and thus the counterfactual implications of trade shocks, depends on product-level dispersion.