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Heterogeneous firms and trade costs: a reading of French access to European agro-food market


  • Chevassus-Lozza, Emmanuelle
  • Latouche, Karine


This article offers a new reading of intra-European trade based on recent developments in new international economics (Melitz, 2003; Chaney, 2008). These models take the heterogeneity of firms into account and offer a micro-economic analysis of the process of selection at work for firms entering markets. An exporting firm has to bear certain specific costs to break into a market, and only sufficiently productive firms are able to do so. Using individual data for French agro-food firms and the distribution of their exports across European markets, this article shows that access conditions to the various European markets are not identical for French firms: the Belgian market would seem to be a natural extension of the French market, whereas the markets of small, distant countries (Austria, Finland or Sweden) are the least accessible. Econometric analysis based on analysis both of the firm selection process and of the value of their exports shows that the standard geographical variables (distance, country size) affecting the single European market still play a major role in the choice of export markets. Results also reveal that there are still remaining trade costs at entry to the different European markets; but these trade frictions don’t matter to all firms in the same way. The higher the firm experience, the lower the impact of trade costs.

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  • Chevassus-Lozza, Emmanuelle & Latouche, Karine, 2008. "Heterogeneous firms and trade costs: a reading of French access to European agro-food market," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44123, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae08:44123

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    References listed on IDEAS

    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. de Sousa, José & Mayer, Thierry & Zignago, Soledad, 2012. "Market access in global and regional trade," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 1037-1052.
    3. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    4. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
    5. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
    6. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    7. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
    8. Emmanuelle Chevassus-Lozza & Danielle Galliano, 2003. "Local Spillovers, Firm Organization and Export Behaviour: Evidence from the French Food Industry," Regional Studies, Taylor & Francis Journals, vol. 37(2), pages 147-158.
    9. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    10. Bruno Henry de Frahan & Mark Vancauteren, 2006. "Harmonisation of food regulations and trade in the Single Market: evidence from disaggregated data," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(3), pages 337-360, September.
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    firm heterogeneity; trade costs; European Integration.; International Relations/Trade;

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