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Exports, Borders, Distance, and Plant Size

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  • Thomas J. Holmes
  • John J. Stevens

Abstract

The fact that large manufacturing plants export relatively more than small plants has been at the foundation of much work in the international trade literature. We examine this fact using Census micro data on plant shipments from the Commodity Flow Survey. We show the fact is not entirely an international trade phenomenon; part of it can be accounted for by the effect of distance, distinct from any border effect. Export destinations tend to be further than domestic destinations, and large plants tend to ship further distances even to domestic locations, as compared with small plants. We develop an extension of the Melitz (2003) model and use it to set up an analysis with model interpretations of ratios between large plant and small plant shipments that can be calculated with the data. We obtain a decomposition of the overall ratio into a term that varies with distance, holding fixed the border, and a term that varies with the border, holding fixed the distance. The distance term accounts for more than half of the overall difference.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16046.

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Date of creation: Jun 2010
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Publication status: published as Holmes, Thomas J. & Stevens, John J., 2012. "Exports, borders, distance, and plant size," Journal of International Economics, Elsevier, vol. 88(1), pages 91-103.
Handle: RePEc:nbr:nberwo:16046

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  1. Thomas J. Holmes & John J. Stevens, 2010. "An Alternative Theory of the Plant Size Distribution with an Application to Trade," NBER Working Papers, National Bureau of Economic Research, Inc 15957, National Bureau of Economic Research, Inc.
  2. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, American Economic Association, vol. 86(5), pages 1112-25, December.
  3. Hillberry, Russell & Hummels, David, 2008. "Trade responses to geographic frictions: A decomposition using micro-data," European Economic Review, Elsevier, Elsevier, vol. 52(3), pages 527-550, April.
  4. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers, National Bureau of Economic Research, Inc 8079, National Bureau of Economic Research, Inc.
  5. Andrew.B Bernard & J. Bradford Jensen & Stephen Redding & Peter K. Schott, 2007. "Firms in international trade," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 3682, London School of Economics and Political Science, LSE Library.
  6. Andrew B. Bernard & J. Bradford Jensen & Peter K. Schott, 2009. "Importers, Exporters and Multinationals: A Portrait of Firms in the U.S. that Trade Goods," NBER Chapters, National Bureau of Economic Research, Inc, in: Producer Dynamics: New Evidence from Micro Data, pages 513-552 National Bureau of Economic Research, Inc.
  7. Russell Hillberry & David Hummels, 2002. "Intra-national Home Bias: Some Explanations," NBER Working Papers, National Bureau of Economic Research, Inc 9022, National Bureau of Economic Research, Inc.
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  12. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 84(4), pages 682-690, November.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Large plants and distance to customers
    by Economic Logician in Economic Logic on 2010-09-10 14:07:00
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Cited by:
  1. repec:hal:wpaper:halshs-00566431 is not listed on IDEAS
  2. Kristian Behrens & Giordano Mion & Yasusada Murata & Jens Südekum, 2011. "Spatial Frictions," CEP Discussion Papers, Centre for Economic Performance, LSE dp1108, Centre for Economic Performance, LSE.
  3. Nobuaki Yamashita & Toshiyuki Matsuura & Kentaro Nakajima, 2013. "Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China," Keio/Kyoto Joint Global COE Discussion Paper Series, Keio/Kyoto Joint Global COE Program 2012-042, Keio/Kyoto Joint Global COE Program.
  4. ZHELOBODKO, Evgeny & KOKOVIN, Sergey & Parenti, Mathieu & THISSE, Jacques-François, . "Monopolistic competition beyond the constant elasticity of substitution," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -2488, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Chang-Tai Hsieh & Peter J. Klenow, 2012. "The Life Cycle of Plants in India and Mexico," NBER Working Papers, National Bureau of Economic Research, Inc 18133, National Bureau of Economic Research, Inc.
  6. Asier Minondo, . "Exporters of services in Spain," Working Papers, Basque Institute of Competitiveness 2011R04, Basque Institute of Competitiveness.
  7. Minondo, Asier, 2012. "Trading firms in the Spanish services sector," MPRA Paper, University Library of Munich, Germany 43224, University Library of Munich, Germany.
  8. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series, The World Bank 6534, The World Bank.
  9. A. Kerem Cosar & Paul L. E. Grieco & Felix Tintelnot, 2012. "Borders, Geography, and Oligopoly: Evidence from the Wind Turbine Industry," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 1228, Koc University-TUSIAD Economic Research Forum.

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