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Trade Liberalization and New Exporters' Size: A Test of Heterogeneous Firm Models

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  • Marinov Rosen

    () (Graduate Institute of International Studies)

  • Rocha Nadia

    () (Graduate Institute of International Studies)

  • DiNino Virginia

    () (Graduate Institute of International Studies)

Abstract

This paper tests an empirical implication of heterogeneous firm models along the lines of Melitz (2003) in the context of falling trade costs. Using the EU's intensive liberalization phase (1993-2002) as a natural experiment, we investigate freer trade's impact on the frequency of market reorientation across the productivity distribution of active firms to shed light on the presence of a minimum productivity (size) threshold for profitable sales abroad. Contrary to the models' predictions, firms that switch from non-exporting to exporting over the studied period are not concentrated in a particular size range. Our findings, based on a rich data set of French manufacturing enterprises, suggest a scope for fine-tuning of the theoretical framework.

Suggested Citation

  • Marinov Rosen & Rocha Nadia & DiNino Virginia, 2008. "Trade Liberalization and New Exporters' Size: A Test of Heterogeneous Firm Models," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-14, May.
  • Handle: RePEc:bpj:bejeap:v:8:y:2008:i:1:n:10
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    References listed on IDEAS

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    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, Oxford University Press, vol. 113(3), pages 903-947.
    2. Aw, Bee Yan & Chung, Sukkyun & Roberts, Mark J, 2000. "Productivity and Turnover in the Export Market: Micro-level Evidence from the Republic of Korea and Taiwan (China)," World Bank Economic Review, World Bank Group, vol. 14(1), pages 65-90, January.
    3. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
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    Cited by:

    1. Matthew A. Cole & Robert J. R. Elliott & Supreeya Virakul, 2010. "Firm Heterogeneity, Origin of Ownership and Export Participation," The World Economy, Wiley Blackwell, vol. 33(2), pages 264-291, February.
    2. repec:eco:journ1:2018-01-22 is not listed on IDEAS

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