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The Extensive Margin of Exporting Products: A Firm-level Analysis

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  • Costas Arkolakis
  • Marc-Andreas Muendler

Abstract

We 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 Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3309.

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Date of creation: 2010
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Handle: RePEc:ces:ceswps:_3309

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Related research

Keywords: international trade; heterogeneous firms; multi-product firms; firm and product panel data; Brazil;

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  1. 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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