Firm-Level Heterogeneity and the Decision to Export: A Real Option Approach
AbstractIn "new" new international trade theory, whether firms export or not are determined by their productivity. These models assume that firms enter a market to find their productivity levels revealed to them as in a lottery. In this paper we propose an alternative way to model whether firms export or not, namely as a firm-level decision akin to an investment decision with a real option value. We show that endogenizing the export decision is consistent with patterns of productivity and exporting reported in the empirical literature.
Download InfoIf 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.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7346.
Length: 31 pages
Date of creation: Apr 2013
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Find related papers by JEL classification:
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-BEC-2013-04-27 (Business Economics)
- NEP-ENT-2013-04-27 (Entrepreneurship)
- NEP-INT-2013-04-27 (International Trade)
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.:
- Davide Castellani & Giorgia Giovannetti, 2009.
"Productivity and the international firm: dissecting heterogeneity,"
Development Working Papers
270, Centro Studi Luca d\'Agliano, University of Milano.
- Davide Castellani & Giorgia Giovannetti, 2010. "Productivity and the international firm: dissecting heterogeneity," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 13(1), pages 25-42.
- Davide Castellani & Giorgia Giovannetti, 2010. "Productivity and the international firm: dissecting heterogeneity," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(1), pages 25-42.
- Sofronis Clerides & Saul Lach & James Tybout, 1996.
"Is "learning-by-exporting" important? Micro-dynamic evidence from Colombia, Mexico and Morocco,"
Finance and Economics Discussion Series
96-30, Board of Governors of the Federal Reserve System (U.S.).
- 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, MIT Press, vol. 113(3), pages 903-947, August.
- Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
- Naude, Wim & Rossouw, Stephanie, 2009.
"Early International Entrepreneurship in China: Extent and Determinants,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Wim Naudé & Stephanié Rossouw, 2010. "Early international entrepreneurship in China: Extent and determinants," Journal of International Entrepreneurship, Springer, vol. 8(1), pages 87-111, March.
- Dixit, A., 1988.
"Entry And Exit Decisions Under Uncertainty,"
91, Princeton, Department of Economics - Financial Research Center.
- Andrew B. Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2007.
"Firms in International Trade,"
CEP Discussion Papers
dp0795, Centre for Economic Performance, LSE.
- Andrew Bernard & J. Bradford Jensen & Stephen Redding & Peter Schott, 2007. "Firms in International Trade," Working Papers 07-14, Center for Economic Studies, U.S. Census Bureau.
- Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," NBER Working Papers 13054, National Bureau of Economic Research, Inc.
- Bernard, Andrew & Jensen, J Bradford & Redding, Stephen J & Schott, Peter, 2007. "Firms in International Trade," CEPR Discussion Papers 6277, C.E.P.R. Discussion Papers.
- Erdal Yalcin, 2009.
"Uncertain Productivity Growth and the Choice between FDI and Export,"
CESifo Working Paper Series
2773, CESifo Group Munich.
- Davide Sala & Erdal Yalcin, 2010. "Uncertain Productivity Growth and the Choice between FDI and Export," DEGIT Conference Papers c015_030, DEGIT, Dynamics, Economic Growth, and International Trade.
- Yalcin, Erdal & Sala, Davide, 2012. "Uncertain productivity growth and the choice between FDI and export," Discussion Papers of Business and Economics 19/2012, Department of Business and Economics, University of Southern Denmark.
- Marc J. Melitz, 2003.
"The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity,"
Econometric Society, vol. 71(6), pages 1695-1725, November.
- Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
- Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
- Gilroy, Bernard Michael & Lukas, Elmar, 2006.
"The choice between greenfield investment and cross-border acquisition: A real option approach,"
The Quarterly Review of Economics and Finance,
Elsevier, vol. 46(3), pages 447-465, July.
- Gilroy, Bernard Michael & Lukas, Elmar, 2005. "The Choice between Greenfield Investment and Cross-border Acquisition: A Real Option Approach," MPRA Paper 18819, University Library of Munich, Germany.
- David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
- Han-Hsin Chang & Charles Van Marrewijk, 2013.
"Firm heterogeneity and development: Evidence from Latin American countries,"
The Journal of International Trade & Economic Development,
Taylor & Francis Journals, vol. 22(1), pages 10-51, February.
- H.H. Chang & C. van Marrewijk, 2011. "Firm Heterogeneity and Development: Evidence from Latin American countries," Working Papers 11-14, Utrecht School of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.