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Heterogeneous Exporter Behaviour: Exploring the Evidence for Sunk-Costs and Hysteresis

Author

Listed:
  • Anne Marie Gleeson

    (Trinity College Dublin)

  • Frances Ruane

    (Economic and Social Research Institute (ESRI))

Abstract

Recent economic literature suggests the importance of sunk costs and hysteresis in explaining export patterns in international trade. To explore their empirical importance, we present a new conceptual framework that distinguishes six different types of exporter behaviour, and apply this framework to a unique longitudinal data set on Irish manufacturing. Our analysis allows us to identify significant numbers of manufacturers who engage in ?exporter re-switching behaviour?. The magnitude of these numbers leads us to question the widespread importance of sunk costs. In response to export-market shocks, we find strong evidence of both heterogeneous exporter responses and hysteresis.

Suggested Citation

  • Anne Marie Gleeson & Frances Ruane, 2007. "Heterogeneous Exporter Behaviour: Exploring the Evidence for Sunk-Costs and Hysteresis," Papers WP196, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esr:wpaper:wp196
    as

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    File URL: https://www.esri.ie/pubs/WP196.pdf
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    References listed on IDEAS

    as
    1. Sofronis K. Clerides & Saul Lach & James R. Tybout, 1998. "Is Learning by Exporting Important? Micro-Dynamic Evidence from Colombia, Mexico, and Morocco," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 903-947.
    2. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-638, June.
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    More about this item

    Keywords

    heterogeneous exporters; sunk costs; re-switching behaviour;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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