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Export Decision under Risk

Author

Listed:
  • De Sousa, José
  • Disdier, Anne-Célia
  • Gaigné, Carl

Abstract

Using firm and industry data, we unveil two empirical regularities: (i) Demand uncertainty not only reduces export probabilities but also decreases export quantities and increases export prices; (ii) The most productive exporters are more affected by higher industry-wide expenditure volatility than are the least productive exporters. We rationalize these regularities by developing a new firm-based trade model wherein managers are risk averse. Higher volatility induces the reallocation of export shares from the most to the least productive incumbents. Greater skewness of the demand distribution and/or higher trade costs weaken this effect. Our results hold for a large class of consumer utility functions.

Suggested Citation

  • De Sousa, José & Disdier, Anne-Célia & Gaigné, Carl, 2017. "Export Decision under Risk," Working Papers 265728, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
  • Handle: RePEc:ags:inrasl:265728
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    1. repec:eee:jcecon:v:46:y:2018:i:4:p:1178-1193 is not listed on IDEAS
    2. repec:eee:inecon:v:115:y:2018:i:c:p:145-158 is not listed on IDEAS
    3. Héricourt, Jérôme & Nedoncelle, Clément, 2018. "Multi-destination firms and the impact of exchange-rate risk on trade," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1178-1193.

    More about this item

    Keywords

    International Relations/Trade;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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