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Prof Sifan Xue
Assistant Professor
National School of Development
Peking University

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 incorporating firm-level heterogeneity in product appeal distributions significantly alters the counterfactual implications of trade shocks.