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Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Market

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  • Federico Ciliberto

    (University of Virginia, USA)

  • Ina C. Jäkel

    (Department of Economics and Business Economics, Aarhus University, Denmark)

Abstract

In many countries, exports are highly concentrated among a few "superstar" firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 54.3 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: (i) overstating the probability that firms would start exporting to a market following tariff elimination by 8 percentage points; and, (ii) overstating the probability that firms would stop exporting to a market if tariffs were imposed by 7.5 percentage points. We also show that competitive effects vary across export markets and competitors. This heterogeneity in the competitive effects implies that there exist multiple equilibria, both in the identity and in the number of firms.

Suggested Citation

  • Federico Ciliberto & Ina C. Jäkel, 2017. "Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Market," Economics Working Papers 2017-09, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2017-09
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    1. Albornoz, Facundo & Calvo-Pardo, Héctor & Corcos, Gregory & Ornelas, Emanuel, 2021. "Sequential exporting across countries and products," LSE Research Online Documents on Economics 114383, London School of Economics and Political Science, LSE Library.
    2. Stjepan Srhoj & Alex Coad & Janette Walde, 2022. "HGX: The Anatomy of High Growth Exporters," Working Papers 2022-15, Faculty of Economics and Statistics, University of Innsbruck.
    3. Ina C. Jäkel, 2021. "Export Credit Guarantees: Direct Effects on the Treated and Spillovers to their Suppliers," Economics Working Papers 2021-09, Department of Economics and Business Economics, Aarhus University.
    4. Ina C. Jäkel & Søren Østervig & Erdal Yalcin, 2022. "The Effects of Heterogeneous Sanctions on Exporting Firms —Evidence from Denmark," CESifo Working Paper Series 10086, CESifo.

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    More about this item

    Keywords

    Export participation; Strategic interaction; Multiple equilibria; Trade policy;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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