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Learning, incomplete contracts and export dynamics: theory and evidence from French firms

Author

Listed:
  • Romain Aeberhardt

    () (CREST)

  • Ines Buono

    () (Bank of Italy)

  • Harald Fadinger

    () (University of Vienna)

Abstract

Using French firm-level trade data, we provide empirical support for a heterogeneous firm model in which exporting requires finding a local partner in each market: contracts are incomplete, exporters must learn the reliability of their partners through experience, and export behaviour is state-dependent due to matching frictions. As predicted by our theoretical model, we find that better legal institutions ease contracting frictions especially in sectors with serious contracting problems. This increases state dependence by more in those sectors. Finally, hazard rates depend on the quality of local legal institutions and decline with the age of the relationship, as unreliable partners are weeded out.

Suggested Citation

  • Romain Aeberhardt & Ines Buono & Harald Fadinger, 2012. "Learning, incomplete contracts and export dynamics: theory and evidence from French firms," Temi di discussione (Economic working papers) 883, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_883_12
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Bengt Söderlund & Patrik Tingvall, 2014. "Dynamic effects of institutions on firm-level exports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 277-308, May.
    2. Araujo, Luis & Mion, Giordano & Ornelas, Emanuel, 2016. "Institutions and export dynamics," Journal of International Economics, Elsevier, vol. 98(C), pages 2-20.
    3. Ingo Geishecker & Philipp J.H. Schröder & Allan Sørensen, 2016. "One-off Export Events," CESifo Working Paper Series 6207, CESifo Group Munich.
    4. Defever, Fabrice & Fischer, Christian & Suedekum, Jens, 2016. "Relational contracts and supplier turnover in the global economy," Journal of International Economics, Elsevier, pages 147-165.
    5. Gabriel Felbermayr & Gilbert Spiegel, 2014. "A Simple Theory of Trade, Finance and Firm Dynamics," Review of International Economics, Wiley Blackwell, vol. 22(2), pages 253-274, May.
    6. Heyman Fredrik & Tingvall Patrik Gustavsson, 2015. "The Dynamics of Offshoring and Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1975-2016.
    7. Wen-Bin Chuang & Hui-lin Lin & Chien-Wei Wu, 2015. "Does Institutional Quality Strengthen The Positive Influence of Offshore R&D Strategy on the Firm Productivity?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(2), pages 279-294, February.
    8. Movahedi, Mohammad, 2013. "Le commerce international, l’adoption de l’innovation et le choix de l’entrée-sortie à l’exportation des firmes
      [International trade, innovation adoption and export entry-exit choice of the firms]
      ," MPRA Paper 44268, University Library of Munich, Germany, revised 01 Jan 2014.
    9. Ines Buono & Harald Fadinger & Stefan Berger, 2008. "The Micro Dynamic of Exporting-Evidence from French Firms," Vienna Economics Papers 0901, University of Vienna, Department of Economics.
    10. Gabriel Felbermayr & Benjamin Jung, 2011. "Trade Intermediation and the Organization of Exporters," Review of International Economics, Wiley Blackwell, pages 634-648.
    11. Antonio Accetturo & Andrea Linarello & Andrea Petrella, 2015. "Judiciary efficiency and trade in tasks," ERSA conference papers ersa15p439, European Regional Science Association.
    12. Defever, Fabrice & Fischer, Christian & Suedekum, Jens, 2017. "Supplier search and re-matching in global sourcing: Theory and evidence from China," DICE Discussion Papers 273, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    13. Antoine Berthou & Hélène Ehrhart, 2017. "Trade networks and colonial trade spillovers," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 891-923, September.
    14. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
    15. Antonio Accetturo & Andrea Linarello & Andrea Petrella, 2017. "Legal enforcement and Global Value Chains: micro-evidence from Italian manufacturing firms," Questioni di Economia e Finanza (Occasional Papers) 397, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    trade dynamics; learning; institutions; state dependence; firm-level trade data.;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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