Advanced Search
MyIDEAS: Login

A Balls-and-Bins Model of Trade

Contents:

Author Info

  • Armenter, Roc
  • Koren, Miklós

Abstract

A number of stylized facts have been documented about the extensive margin of trade - which firms export, and how many products they send to how many destinations. We argue that the sparse nature of trade data is crucial to understanding these stylized facts. Typically the number of observations - that is, total shipments - is low relative to the number of possible classifications - e.g., countries and product codes. We propose a statistical model to account for the sparsity of trade data. We formalize the assignment of shipments to categories as balls falling into bins. The balls-and-bins model quantitatively reproduces the prevalence of zero product-level trade flows across export destinations. The model also accounts for firm-level facts: as in the data, most firms export a single product to a single country but these firms represent a tiny fraction of total exports. In contrast, the balls-and-bins model cannot reproduce the small fraction of exporters among U.S. firms. We discuss the implications for identifying the relevant model of the extensive margin in trade.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cepr.org/pubs/dps/DP7783.asp
Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7783.

as in new window
Length:
Date of creation: Apr 2010
Date of revision:
Handle: RePEc:cpr:ceprdp:7783

Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820

Order Information:
Email:

Related research

Keywords: extensive margin; international trade; sparse trade;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  2. László Halpern & Miklós Koren & Adam Szeidl, 2011. "Imported Inputs and Productivity," CeFiG Working Papers 8, Center for Firms in the Global Economy, revised 16 Sep 2011.
  3. Jonathan Eaton, Marcela Eslava, Maurice Kugler,James Tybout, 1970. "Export Dynamics in Colombia: Firm-Level Evidence," Working Papers eg0036, Wilfrid Laurier University, Department of Economics, revised 1970.
  4. Halpern, László & Koren, Miklós & Szeidl, Adam, 2005. "Imports and Productivity," CEPR Discussion Papers 5139, C.E.P.R. Discussion Papers.
  5. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
  6. Ghosh, Sucharita & Yamarik, Steven, 2004. "Does trade creation measure up? A reexamination of the effects of regional trading arrangements," Economics Letters, Elsevier, vol. 82(2), pages 213-219, February.
  7. Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2004. "Dissecting Trade: Firms, Industries, and Export Destinations," NBER Working Papers 10344, National Bureau of Economic Research, Inc.
  8. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
  9. Baldwin, Richard & Harrigan, James, 2007. "Zeros, Quality and Space: Trade Theory and Trade Evidence," CEPR Discussion Papers 6368, C.E.P.R. Discussion Papers.
  10. Simon J. Evenett & Wolfgang Keller, 1998. "On Theories Explaining the Success of the Gravity Equation," NBER Working Papers 6529, National Bureau of Economic Research, Inc.
  11. Ghosh, Sucharita & Yamarik, Steven, 2004. "Are regional trading arrangements trade creating?: An application of extreme bounds analysis," Journal of International Economics, Elsevier, vol. 63(2), pages 369-395, July.
  12. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 441-487, 05.
  13. Jon Haveman & David Hummels, 2004. "Alternative hypotheses and the volume of trade: the gravity equation and the extent of specialization," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 199-218, February.
  14. Carolyn L. Evans & James Harrigan, 2005. "Distance, Time, and Specialization: Lean Retailing in General Equilibrium," American Economic Review, American Economic Association, vol. 95(1), pages 292-313, March.
  15. Simeon Djankov & Caroline Freund & Cong S. Pham, 2010. "Trading on Time," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 166-173, February.
  16. Jože P. Damijan & Sašo Polanec & Janez Prašnikar, 2007. "Outward FDI and Productivity: Micro-evidence from Slovenia," The World Economy, Wiley Blackwell, vol. 30(1), pages 135-155, 01.
  17. Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
  18. Costas Arkolakis, 2010. "Market Penetration Costs and the New Consumers Margin in International Trade," Journal of Political Economy, University of Chicago Press, vol. 118(6), pages 1151 - 1199.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Cecília Hornok & Miklós Koren, 2011. "Lumpy Trade and the Welfare Effects of Administrative Barriers," CeFiG Working Papers 14, Center for Firms in the Global Economy, revised 22 Sep 2011.
  2. Thomas Chaney, 2011. "The Network Structure of International Trade," NBER Working Papers 16753, National Bureau of Economic Research, Inc.
  3. Roc Armenter & Miklós Koren, 2009. "Economies of Scale and the Size of Exporters," CeFiG Working Papers 7, Center for Firms in the Global Economy, revised 12 Mar 2009.
  4. Gábor Békés & Balázs Muraközy, 2011. "Temporary trade and heterogeneous firms," CeFiG Working Papers 6, Center for Firms in the Global Economy, revised 13 Feb 2011.
  5. Giorgio Fagiolo & Tiziano Squartini & Diego Garlaschelli, 2011. "Null Models of Economic Networks: The Case of the World Trade Web," Papers 1112.2895, arXiv.org, revised Sep 2012.
  6. Fabrice Defever & Benedikt Heid & Mario Larch, 2011. "Spatial Exporters," CEP Discussion Papers dp1100, Centre for Economic Performance, LSE.
  7. Massimo Riccaboni & Stefano Schiavo, 2010. "The Structure and Growth of International Trade," DEGIT Conference Papers c015_032, DEGIT, Dynamics, Economic Growth, and International Trade.
  8. J.M.C. Santos Silva & Silvana Tenreyro & Kehai Wei, 2012. "Estimating the Extensive Margin of Trade," Economics Discussion Papers 721, University of Essex, Department of Economics.
  9. Balazs Murakozy & Gabor Bekes, 2009. "Temporary Trade," IEHAS Discussion Papers 0909, Institute of Economics, Hungarian Academy of Sciences.
  10. Bernard, Andrew & Redding, Stephen J & Schott, Peter, 2006. "Multi-Product Firms and Product Switching," CEPR Discussion Papers 5708, C.E.P.R. Discussion Papers.
  11. Brent Neiman & Gita Gopinath, 2011. "Trade Adjustment and Productivity in Large Crises," 2011 Meeting Papers 975, Society for Economic Dynamics.
  12. Cecília Hornok & Miklós Koren, 2011. "Administrative Barriers and the Lumpiness of Trade," CEU Working Papers 2012_6, Department of Economics, Central European University, revised 01 Sep 2011.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:7783

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.