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Export market participation with sunk costs and firm heterogeneity

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  • Evis Sinani
  • Bersant Hobdari

Abstract

In this article we investigate the importance of sunk costs, firm characteristics and spillovers from nearby exporters on a firm's decision to participate in exporting. The empirical analysis involves the estimation of a nonstructural, discrete choice, dynamic model with firm heterogeneity. By using panel data for Estonian companies from 1994 to 1999 we find that: (i) both sunk costs and observable firm characteristics are important determinants of export market participation; (ii) previous history matters, in that, if a firm has been exporting the previous period or the period before, it significantly increases the likelihood of the firm exporting in the current period; (iii) larger firms with high capital intensity and foreign ownership are more likely to be exporters; (iv) operating in an export-oriented industry increases a firm's likelihood of exporting.

Suggested Citation

  • Evis Sinani & Bersant Hobdari, 2010. "Export market participation with sunk costs and firm heterogeneity," Applied Economics, Taylor & Francis Journals, vol. 42(25), pages 3195-3207.
  • Handle: RePEc:taf:applec:v:42:y:2010:i:25:p:3195-3207
    DOI: 10.1080/00036840802112372
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    Cited by:

    1. Emanuele Bacchiocchi & Massimo Florio & Anna Giunta, 2014. "Internationalization and industrial districts: evidence from the Italian automotive supply chain," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(1), pages 1-21, January.
    2. Dieter Pennerstorfer, 2011. "Export, Migration, and Costs of Market Entry: Evidence from Central European Firms," WIFO Working Papers 405, WIFO.
    3. repec:spr:jqecon:v:15:y:2017:i:2:d:10.1007_s40953-016-0056-1 is not listed on IDEAS
    4. Vu, Van Huong, 2012. "Higher productivity in Exporters: self-selection, learning by exporting or both? Evidence from Vietnamese manufacturing SMEs," MPRA Paper 40708, University Library of Munich, Germany.
    5. Marianne Matthee & Neil Rankin & Carli Bezuidenhout, 2017. "Labour demand and the distribution of wages in South African manufacturing exporters," WIDER Working Paper Series 011, World Institute for Development Economic Research (UNU-WIDER).

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