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Trade barriers and trade flows with product heterogeneity: An application to US motion picture exports

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  • Hanson, Gordon
  • Xiang, Chong

Abstract

We extend Melitz (2003) to allow for both global and bilateral fixed export costs. If global (bilateral) export costs dominate, the average sales ratio (import sales per product variety/domestic sales per variety), decreases (increases) in variable (fixed) trade barriers, due to adjustment along the intensive (extensive) margin of trade. Using novel data on bilateral US movie exports we find that (i) variation in box-office revenues per movie is much larger than in the number of movies exported, and (ii) the average sales ratio decreases in geographic and linguistic distance. These findings suggest that global fixed export costs dominate.

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  • Hanson, Gordon & Xiang, Chong, 2011. "Trade barriers and trade flows with product heterogeneity: An application to US motion picture exports," Journal of International Economics, Elsevier, vol. 83(1), pages 14-26, January.
  • Handle: RePEc:eee:inecon:v:83:y:2011:i:1:p:14-26
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    References listed on IDEAS

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    Cited by:

    1. Lincoln, William F. & McCallum, Andrew H., 2011. "Entry Costs and Increasing Trade," Working Papers 619, Research Seminar in International Economics, University of Michigan.
    2. Victor Ginsburgh & Shlomo Weber, 2016. "Linguistic Distances and Ethno-Linguistic Fractionalisation and Disenfranchisement Indices," Working Papers ECARES ECARES 2016-25, ULB -- Universite Libre de Bruxelles.
    3. Leonardi, Marco & Pellizzari, Michele & Tabasso, Domenico, 2015. "Wage compression within the firm," CEPR Discussion Papers 10770, C.E.P.R. Discussion Papers.
    4. JdD Tena & G. Meloni & D. Paolini, 2014. "American Beauty: trade flows and export costs of US movies Â," Working Paper CRENoS 201410, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    5. De Benedictis Luca & Nenci Silvia & Santoni Gianluca & Tajoli Lucia & Vicarelli Claudio, 2014. "Network Analysis of World Trade using the BACI-CEPII Dataset," Global Economy Journal, De Gruyter, pages 1-57.
    6. Francesco Di Comite & Jacques-François Thisse & Hylke Vandenbussche, 2011. "Verti-zontal differentiation in monopolistic competition," Working Paper Research 216, National Bank of Belgium.
    7. Ginsburgh, Victor & Weber, Shlomo, 2015. "Linguistic Distances and their Use in Economics," CEPR Discussion Papers 10640, C.E.P.R. Discussion Papers.
    8. William F. Lincoln & Andrew H. McCallum, 2011. "Entry Costs & Increasing Trade," William Davidson Institute Working Papers Series wp1024, William Davidson Institute at the University of Michigan.
    9. di Giovanni, Julian & Levchenko, Andrei A. & Rancière, Romain, 2011. "Power laws in firm size and openness to trade: Measurement and implications," Journal of International Economics, Elsevier, pages 42-52.
    10. Xuan Wei & Suzanne Thornsbury & David Schweikhardt, 2017. "Hurdles to Exporting: A Decomposition of Fixed Export Costs," Review of Economics & Finance, Better Advances Press, Canada, vol. 7, pages 1-18, February.
    11. Dalton, John T. & Leung, Tin Cheuk, 2017. "Strategic decision-making in Hollywood release gaps," Journal of International Economics, Elsevier, pages 10-21.
    12. Hellmanzik, Christiane & Schmitz, Martin, 2015. "Virtual proximity and audiovisual services trade," European Economic Review, Elsevier, vol. 77(C), pages 82-101.
    13. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2011. "Geopolitics, Global Patterns of Oil Trade, and China¡¦s Oil Security Quest," Working Papers 322011, Hong Kong Institute for Monetary Research.
    14. Cristea, Anca D., 2011. "Buyer-seller relationships in international trade: Evidence from U.S. States' exports and business-class travel," Journal of International Economics, Elsevier, pages 207-220.
    15. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2013. "International Politics and Import Diversification," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 1091-1121.
    16. repec:eee:eecrev:v:98:y:2017:i:c:p:169-188 is not listed on IDEAS
    17. Luis Castro & Ben G. Li & Keith E. Maskus & Yiqing Xie, 2016. "Fixed Export Costs and Export Behavior," Southern Economic Journal, Southern Economic Association, vol. 83(1), pages 300-320, July.
    18. Sergey Mityakov & Heiwai Tang & Kevin K. Tsui, 2012. "InternationalPolitics and Import Diversification in the Second Wave of Globalization," Discussion Papers Series, Department of Economics, Tufts University 0770, Department of Economics, Tufts University.
    19. Darlene Chisholm & Víctor Fernández-Blanco & S. Abraham Ravid & W. David Walls, 2015. "Economics of motion pictures: the state of the art," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 39(1), pages 1-13, February.
    20. Holloway, Isaac R., 2017. "Learning via sequential market entry: Evidence from international releases of U.S. movies," Journal of International Economics, Elsevier, pages 104-121.
    21. P. Belleflamme & D. Paolini, 2015. "Strategic Promotion and Release Decisions for Cultural Goods," Working Paper CRENoS 201508, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    22. Isaac Holloway, 2014. "Foreign entry, quality, and cultural distance: product-level evidence from US movie exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 371-392, May.
    23. Mau, Karsten, 2017. "US policy spillover(?) – China’s accession to the WTO and rising exports to the EU," European Economic Review, Elsevier, vol. 98(C), pages 169-188.
    24. repec:bla:ecinqu:v:55:y:2017:i:2:p:778-793 is not listed on IDEAS

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