Abstract: This paper develops and empirically tests a model linking firm productivity, digital technology adoption, and resource misallocation. Building on the Melitz (2003) framework, we propose a selection mechanism in which more productive firms are more likely to overcome fixed costs of digitalization, but market distortions can inhibit this process. Using administrative tax data for Chinese firms, we find that digital adoption is strongly increasing in firm productivity, consistent with the model’s selection predictions. Moreover, structural estimation using the Simulated Method of Moments (SMM) uncovers substantial heterogeneity in digital efficiency.

Speaker bio: Liu Yunting is a tenured Associate Professor at the School of Economics, Peking University, where he also serves as a PhD advisor and the Associate Chair of the Finance Department. His research interests include asset pricing, financial economics, and macro-finance. His work has been published in leading journals such as Management Science, the Journal of Banking and Finance, Economic Research Journal (《经济研究》), China Industrial Economics (《中国工业经济》), and Journal of Management Sciences (《管理科学学报》). He has led and participated in multiple projects funded by the National Natural Science Foundation of China. He has received several honors, including the Baosteel Excellent Teacher Award and the Peking University Outstanding Doctoral Dissertation Advisor Award.