Climate effects on the diversification strategy of export firms: Evidence from China

inverted U-shaped relationship (see Fig 1). Firms tend to reduce export diversity as tempera- ture deviates from the optimum, and the reduction intensifies with larger deviations. The above results are consistent with the theoretical model estimates. In terms of economic significance, each additional day below -2˚C reduces the number of product categories exported by firms by 0.22 (0.1227+0.0937). On average, Firms face 13.6 days below -2˚C per year, resulting in a reduction of 2.94 categories. Similarly, each additional day �28˚C reduces the number of exported categories by 0.09. Firms experience an average of 44 days �28˚C per year, resulting in a reduction of 4 categories. Extreme temperature shocks due to climate change warrant increased attention from an economic perspective for firms and nations. Table 2. Baseline regression results. Variables (1) (2) (3) Diversity Diversity Diversity <-7˚C 0.1976*** -0.1196*** -0.1227*** (0.003) (0.044) (0.044) -7~-2˚C 0.0571*** -0.0855*** -0.0937*** (0.004) (0.033) (0.034) -2~3˚C -0.0076** -0.0682** -0.0687*** (0.003) (0.027) (0.026) 3~8˚C 0.0477*** -0.0332 -0.0361* (0.004) (0.022) (0.021) 13~18˚C -0.0091** 0.0102 -0.0076 (0.004) (0.021) (0.019) 18~23˚C 0.2002*** -0.0827** -0.0984** (0.003) (0.040) (0.040) 23~28˚C 0.0758*** -0.0600* -0.0855** (0.003) (0.032) (0.033) �28˚C 0.1702*** -0.0374 -0.0885*** (0.003) (0.029) (0.033) Prec 0.0089 (0.283) Wind -0.9089 (0.641) Sun -0.5178 (0.373) Wet 2.1966 (3.656) Atmo 6.9357*** (1.781) Constant -15.8563*** 30.3267*** -663.8836***

(0.855) (7.395) (174.911) Firm FE No Yes Yes Province×Year FE No Yes Yes Observations 3,125,406 3,015,824 3,015,824 R2 0.011 0.737 0.737 Note: *, **, *** represent statistical significance levels of 10%, 5%, and 1%, respectively. The parentheses in columns (2)-(3) contain standard errors clustered at the firm and city-year levels. In the subsequent text, unless otherwise specified, the parentheses will indicate standard errors clustered in two-way style. https://doi.org/10.1371/journal.pone.0308391.t002 PLOS ONE Climate effects on the diversification strategy of export firms PLOS ONE | https://doi.org/10.1371/journal.pone.0308391 August 16, 2024 8 / 28