Trade Liberalization and New Exporters' Size: A Test of Heterogeneous Firm Models
AbstractThis paper tests an empirical implication of heterogeneous firm models along the lines of Melitz (2003) in the context of falling trade costs. Using the EU's intensive liberalization phase (1993-2002) as a natural experiment, we investigate freer trade's impact on the frequency of market reorientation across the productivity distribution of active firms to shed light on the presence of a minimum productivity (size) threshold for profitable sales abroad. Contrary to the models' predictions, firms that switch from non-exporting to exporting over the studied period are not concentrated in a particular size range. Our findings, based on a rich data set of French manufacturing enterprises, suggest a scope for fine-tuning of the theoretical framework.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.
Volume (Year): 8 (2008)
Issue (Month): 1 (May)
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Web page: http://www.degruyter.com
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- Matthew A Cole & Robert J R Elliott & Supreeya Virakul, 2009.
"Firm Heterogeneity, Origin of Ownership and Export Participation,"
09-16, Department of Economics, University of Birmingham.
- Matthew A. Cole & Robert J. R. Elliott & Supreeya Virakul, 2010. "Firm Heterogeneity, Origin of Ownership and Export Participation," The World Economy, Wiley Blackwell, vol. 33(2), pages 264-291, 02.
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