The Extensive Margin of Exporting Products: A Firm-level Analysis
AbstractWe use a panel of Brazilian exporters, their products, and destination markets to document a set of regularities for multi-product exporters: (i) few top-selling products account for the bulk of a firm’s exports in a market, (ii) the distribution of exporter scope (the number of products per firm in a market) is similar across markets, and (iii) within each market, exporter scope is positively associated with average sales per product. Our data also show that firms systematically export their highest-sales products across multiple destinations. To account for these regularities, we develop a model of firm-product heterogeneity with entry costs that depend on exporter scope. Estimating this model for the within-firm sales distribution we identify the nature and components of product entry costs. We find that firms face a strong decline in product sales with scope but also that market-specific entry costs drop fast. Counterfactual experiments with globally falling entry costs indicate that a large share of the simulated increase in trade is attributable to declines in the firm’s entry cost for the first product.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3309.
Date of creation: 2010
Date of revision:
international trade; heterogeneous firms; multi-product firms; firm and product panel data; Brazil;
Other versions of this item:
- Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," NBER Working Papers 16641, National Bureau of Economic Research, Inc.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
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- Julian di Giovanni & Andrei A. Levchenko, 2009.
"Firm Entry, Trade, and Welfare in Zipf's World,"
Working Papers, Research Seminar in International Economics, University of Michigan
591, Research Seminar in International Economics, University of Michigan.
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