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An Anatomy of International Trade: Evidence From French Firms

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  • Jonathan Eaton
  • Samuel Kortum
  • Francis Kramarz

Abstract

We examine the sales of French manufacturing firms in 113 destinations, including Franceitself. Several regularities stand out: (1) the number of French firms selling to a market, rela-tive to French market share, increases systematically with market size; (2) sales distributionsare very similar across markets of very different size and extent of French participation; (3)average sales in France rise very systematically with selling to less popular markets and tomore markets. We adopt a model of firm heterogeneity and export participation which weestimate to match moments of the French data using the method of simulated moments. Theresults imply that nearly half the variation across firms that we see in market entry can beattributed to a single dimension of underlying firm heterogeneity, e¢ ciency. Conditional onentry, underlying e¢ ciency accounts for a much smaller variation in sales in any given market. Parameter estimates imply that mixed costs eat up a little more than half of gross pro?ts. Weuse our results to simulate the e¤ects of a counterfactual decline in bilateral trade barriers onFrench ?rms. While total French sales rise by around US$16 billion, sales by the top decileof ?rms rise by nearly US$23 billion. Every lower decile experiences a drop in sales, due toselling less at home or exiting altogether.
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  • Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, September.
    • Handle: RePEc:ecm:emetrp:v:79:y:2011:i:5:p:1453-1498
    DOI: ECTA8318
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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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