Our paper applies the balls-and-bins model to China’s shipment level trade data of 2005. Similar to the results of the US data, we find that the balls-and-bins model matches the numbers and the gravity patterns of zero trade flows both at the country-product and country-firm levels reasonably well, but fails to predict the percentage of exporting firms as in the data. However, different from the results of the US data, we find that the model fails to predict the percentages of the single-product, single-destination, or single-product and single-destination exporting firms as in the data.
Extensive margin Balls-and-bins China’s trade
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We are very grateful to the coordinating editor of this journal, Robert M. Kunst, and an anonymous referee for their constructive comments and valuable suggestions, which significantly improved this paper. We also would like to thank Paul Evans and Bill Dupor for their valuable comments.