IDEAS home Printed from https://ideas.repec.org/p/cii/cepidt/2008-13.html
   My bibliography  Save this paper

Exporting to Insecure Markets: a Firm-Level Analysis

Author

Listed:
  • Matthieu Crozet
  • Pamina Koenig
  • Vincent Rebeyrol

Abstract

This paper proposes an original approach to investigate the influence of insecurity and institutional quality on international trade. We emphasize that insecurity is hardly comparable with other trade barriers such as tariffs because it does not affect all firms similarly. We develop a monopolistic competition trade model with insecurity as a random additional sunk cost for exporting firms. A higher level of insecurity may dissuade large firms to export, while some smaller ones may be able to enter the export market. Hence, insecurity disrupts firms’ selection into export markets, and this has particular effects on trade margins. Two discriminating predictions are derived from the model and confronted to the data. Using individual French firms exports to 100 destination countries, we find clear evidence corroborating our theoretical predictions.

Suggested Citation

  • Matthieu Crozet & Pamina Koenig & Vincent Rebeyrol, 2008. "Exporting to Insecure Markets: a Firm-Level Analysis," Working Papers 2008-13, CEPII research center.
  • Handle: RePEc:cii:cepidt:2008-13
    as

    Download full text from publisher

    File URL: http://www.cepii.fr/PDF_PUB/wp/2008/wp2008-13.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Mirza & Thierry Verdier, 2014. "Are Lives a Substitute for Livelihoods? Terrorism, Security, and US Bilateral Imports," Journal of Conflict Resolution, Peace Science Society (International), vol. 58(6), pages 943-975, September.
    2. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    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


    Cited by:

    1. Cosimo Beverelli & Alexander Keck & Mario Larch & Yoto V. Yotov, 2018. "Institutions, Trade and Development: A Quantitative Analysis," CESifo Working Paper Series 6920, CESifo.
    2. Piotr Gabrielczak & Tomasz Serwach, 2017. "Does the euro increase the complexity of exported goods? The case of Estonia," Lodz Economics Working Papers 4/2017, University of Lodz, Faculty of Economics and Sociology.
    3. Roger Smeets & Harold Creusen & Arjan Lejour & Henk Kox, 2010. "Export margins and export barriers: uncovering market entry costs of exporters in the Netherlands," CPB Document 208.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Roger Smeets & Harold Creusen, 2011. "Fixed export costs and multi-product firms," CPB Discussion Paper 188.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Rudy Douven & Remco Mocking & Ilaria Mosca, 2012. "The Effect of Physician Fees and Density Differences on Regional Variation in Hospital Treatments," CPB Discussion Paper 208.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Balazs Murakozy & Gabor Bekes, 2009. "Temporary Trade," CERS-IE WORKING PAPERS 0909, Institute of Economics, Centre for Economic and Regional Studies.
    7. Eddy Bekkers, 2011. "Heterogeneous Popularity and Exporting Uncertainty," Open Economies Review, Springer, vol. 22(5), pages 797-824, November.
    8. MAYNERIS, Florian & PONCET, Sandra, 2011. "Entry on difficult export markets by Chinese domestic firms: the role of foreign export spillovers," LIDAM Discussion Papers CORE 2011063, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Massimiliano Bratti & Giulia Felice, 2012. "Buyer-Supplier Relationships, Internationalization and Product Innovation," Development Working Papers 327, Centro Studi Luca d'Agliano, University of Milano, revised 13 Nov 2012.
    10. Roger Smeets & Harold Creusen, 2011. "Fixed export costs and multi-product firms," CPB Discussion Paper 188, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Piotr Gabrielczak & Tomasz Serwach, 2017. "The impact of the euro adoption on the complexity of goods in Slovenian exports," Lodz Economics Working Papers 3/2017, University of Lodz, Faculty of Economics and Sociology.
    12. Arjan Lejour & Harold Creusen, 2015. "Using Stepping Stones to Enter Distant Export Markets," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 15(1), pages 107-132, March.
    13. Tomasz Serwach, 2012. "Why Learning by Exporting May Not Be As Common As You Think and What It Means for Policy," International Journal of Management, Knowledge and Learning, International School for Social and Business Studies, Celje, Slovenia, vol. 1(2), pages 157-172.
    14. Békés, Gábor & Muraközy, Balázs, 2012. "Temporary trade and heterogeneous firms," Journal of International Economics, Elsevier, vol. 87(2), pages 232-246.
    15. Türkmen GÖKSEL, 2010. "Export Insurance Policy When Exporting to Lesser-Known Markets," Sosyoekonomi Journal, Sosyoekonomi Society, issue 2010-2.
    16. Vannoorenberghe, G., 2012. "Firm-level volatility and exports," Journal of International Economics, Elsevier, vol. 86(1), pages 57-67.
    17. Osnago, Alberto & Piermartini, Roberta & Rocha, Nadia, 2015. "Trade policy uncertainty as barrier to trade," WTO Staff Working Papers ERSD-2015-05, World Trade Organization (WTO), Economic Research and Statistics Division.
    18. Piotr Gabrielczak & Tomasz Serwach, 2017. "The impact of the euro adoption on the complexity of goods in Slovenian exports," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 35(1), pages 45-71.
    19. Arjan Lejour, 2008. "The Principle of Subsidiarity and Innovation Support Measures," CPB Memorandum 208.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Harold Creusen & Henk Kox & Arjan Lejour & Roger Smeets, 2011. "Exploring the Margins of Dutch Exports: A Firm-Level Analysis," De Economist, Springer, vol. 159(4), pages 413-434, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. De Sousa, José & Mirza, Daniel & Verdier, Thierry, 2018. "Terror networks and trade: Does the neighbor hurt?," European Economic Review, Elsevier, vol. 107(C), pages 27-56.
    2. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? Estimating the Trade Relocation Effects from Civil Conflict," Hannover Economic Papers (HEP) dp-698, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    3. Isabel PROENÇA & Enrique MARTINEZ-GALÁN & Maria Paula FONTOURA, 2017. "Trade Potential Revisited: A Panel Data Analysis For Zimbabwe," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 17(1), pages 113-130.
    4. Marco Colagrossi & Claudio Deiana & Andrea Geraci & Ludovica Giua, 2022. "Hang up on stereotypes: Domestic violence and an anti‐abuse helpline campaign," Contemporary Economic Policy, Western Economic Association International, vol. 40(4), pages 585-611, October.
    5. Mariya Aleksynska & Giovanni Peri, 2014. "Isolating the Network Effect of Immigrants on Trade," The World Economy, Wiley Blackwell, vol. 37(3), pages 434-455, March.
    6. Johannes Buggle & Thierry Mayer & Seyhun Orcan Sakalli & Mathias Thoenig, 2023. "The Refugee’s Dilemma: Evidence from Jewish Migration out of Nazi Germany," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 138(2), pages 1273-1345.
    7. Chen, Natalie & Juvenal, Luciana, 2022. "Markups, quality, and trade costs," Journal of International Economics, Elsevier, vol. 137(C).
    8. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2014. "Product Complexity, Quality of Institutions and the Protrade Effect of Immigrants," The World Economy, Wiley Blackwell, vol. 37(1), pages 63-85, January.
    9. Jules Hugot & Camilo Umana Dajud, 2016. "Trade costs and the Suez and Panama Canals," Working Papers 2016-29, CEPII research center.
    10. Akhtaruzzaman, Muhammad & Berg, Nathan & Lien, Donald, 2017. "Confucius Institutes and FDI flows from China to Africa," China Economic Review, Elsevier, vol. 44(C), pages 241-252.
    11. Mikel Bedayo & Gabriel Jiménez & José-Luis Peydró & Raquel Vegas, 2020. "Screening and Loan Origination Time: Lending Standards, Loan Defaults and Bank Failures," Working Papers 1215, Barcelona School of Economics.
    12. Doukoure Charle Fe, 2021. "Trade flows between the West African Economic and Monetary Union's members so little: does exports structure matter ?," Economics Bulletin, AccessEcon, vol. 41(2), pages 816-833.
    13. Mohamed Amara & Hatem Jemmali, 2018. "Deciphering the Relationship Between Internal Migration and Regional Disparities in Tunisia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 313-331, January.
    14. Felbermayr Gabriel & Steininger Marina, 2019. "Revisiting the Euro’s Trade Cost and Welfare Effects," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(5-6), pages 917-956, October.
    15. Michele Fratianni & Francesco Marchionne, 2011. "The Limits to Integration," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume I, chapter 9, Edward Elgar Publishing.
    16. Anne-Célia Disdier & Lionel Fontagné, 2010. "Trade impact of European measures on GMOs condemned by the WTO panel," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 495-514, September.
    17. Dennis, Allen & Shepherd, Ben, 2007. "Trade costs, barriers to entry, and export diversification in developing countries," Policy Research Working Paper Series 4368, The World Bank.
    18. Rabah Arezki & Klaus Deininger & Harris Selod, 2015. "What Drives the Global "Land Rush"?," The World Bank Economic Review, World Bank, vol. 29(2), pages 207-233.
    19. Peter Egger & Douglas Nelson, 2011. "How Bad Is Antidumping? Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1374-1390, November.
    20. Erik Marel & Ben Shepherd, 2013. "Services Trade, Regulation and Regional Integration: Evidence from Sectoral Data," The World Economy, Wiley Blackwell, vol. 36(11), pages 1393-1405, November.

    More about this item

    Keywords

    Insecurity; Institutions; firm heterogeneity; trade margins;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • F10 - International Economics - - Trade - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cii:cepidt:2008-13. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cepiifr.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.