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Learning, incomplete contracts and export dynamics: theory and evidence from French firms

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  • Romain Aeberhardt

    ()
    (CREST)

  • Ines Buono

    ()
    (Bank of Italy)

  • Harald Fadinger

    ()
    (University of Vienna)

Abstract

Using French firm-level trade data, we provide empirical support for a heterogeneous firm model in which exporting requires finding a local partner in each market: contracts are incomplete, exporters must learn the reliability of their partners through experience, and export behaviour is state-dependent due to matching frictions. As predicted by our theoretical model, we find that better legal institutions ease contracting frictions especially in sectors with serious contracting problems. This increases state dependence by more in those sectors. Finally, hazard rates depend on the quality of local legal institutions and decline with the age of the relationship, as unreliable partners are weeded out.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 883.

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Date of creation: Oct 2012
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Handle: RePEc:bdi:wptemi:td_883_12

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Keywords: trade dynamics; learning; institutions; state dependence; firm-level trade data.;

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References

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Citations

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Cited by:
  1. Heyman, Fredrik & Gustavsson Tingvall, Patrik, 2012. "The Dynamics of Offshoring and Institutions," Ratio Working Papers 190, The Ratio Institute.
  2. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
  3. Felbermayr, Gabriel J. & Jung, Benjamin, 2011. "Trade intermediation and the organization of exporters," Tübinger Diskussionsbeiträge 331, University of Tübingen, School of Business and Economics.
  4. Massimiliano Bratti & Giulia Felice, 2012. "Buyer-Supplier Relationships, Internationalization and Product Innovation," Development Working Papers 327, Centro Studi Luca d\'Agliano, University of Milano, revised 13 Nov 2012.
  5. Ines Buono & Harald Fadinger & Stefan Berger, 2008. "The Micro Dynamic of Exporting-Evidence from French Firms," Vienna Economics Papers 0901, University of Vienna, Department of Economics.
  6. Söderlund, Bengt & Gustavsson Tingvall, Patrik, 2012. "Dynamic Effects of Institutions on Firm-Level Exports," Ratio Working Papers 184, The Ratio Institute.
  7. Gabriel J. Felbermayr & Gilbert Spiegel, 2012. "A Simple Theory of Trade, Finance, and Firm Dynamics," CESifo Working Paper Series 3873, CESifo Group Munich.
  8. Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2012. "Institutions and Export Dynamics," CEPR Discussion Papers 8809, C.E.P.R. Discussion Papers.
  9. Mohammad Movahedi & Olivier Gaussens, 2013. "Les effets de l’exportation sur l’innovation et la productivité : Analyse empirique sur un échantillon de PMI," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201307, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.

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