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

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  • 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, vol. 103(C), pages 147-165.
    5. Studnicka, Zuzanna & Lawless, Martina, 2018. "Old firms and new products: Does experience increase survival?," Papers WP584, Economic and Social Research Institute (ESRI).
    6. 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).
    7. Rita Cappariello & Alberto Felettigh & João Amador & Robert Stehre & Giacomo Oddo & Stefano Federico & Alessandro Borin & Michele Mancini & Sara Formai & Filippo Vergara Caffarelli & Luca Cherubini & , 2016. "Global value chains: new evidence and implications," Workshop and Conferences 21, Bank of Italy, Economic Research and International Relations Area.
    8. 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.
    9. Heyman Fredrik & Tingvall Patrik Gustavsson, 2015. "The Dynamics of Offshoring and Institutions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(4), pages 1975-2016, October.
    10. CHEN Cheng & SENGA Tatsuro & SUN Chang & ZHANG Hongyong, 2018. "Uncertainty, Imperfect Information, and Learning in the International Market," Discussion papers 18010, Research Institute of Economy, Trade and Industry (RIETI).
    11. Alexandre Gazaniol, 2015. "The Location Choices of Multinational Firms: The Role of Internationalisation Experience and Group Affiliation," The World Economy, Wiley Blackwell, vol. 38(8), pages 1246-1277, August.
    12. repec:eee:inecon:v:113:y:2018:i:c:p:55-73 is not listed on IDEAS
    13. 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.
    14. Benedikt Heid, 2014. "Essays on International Trade and Development," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 55, January.
    15. 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.
    16. 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.
    17. Buono, Ines & Formai, Sara, 2018. "The heterogeneous response of domestic sales and exports to bank credit shocks," Journal of International Economics, Elsevier, vol. 113(C), pages 55-73.
    18. Gabriel Felbermayr & Benjamin Jung, 2011. "Trade Intermediation and the Organization of Exporters," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 634-648, September.
    19. Massimiliano Bratti & Giulia Felice, 2012. "Buyer-Supplier Relationships, Internationalization and Product Innovation," Development Working Papers 327, Centro Studi Luca d'Agliano, University of Milano, revised 13 Nov 2012.
    20. Bratti, Massimiliano & Felice, Giulia, 2018. "Product innovation by supplying in domestic and foreign markets," Working Papers 2018-03, Joint Research Centre, European Commission (Ispra site).
    21. Mohammad Movahedi & Olivier Gaussens, 2013. "Les effets de l’exportation sur l’innovation et la productivité : Analyse empirique sur un échantillon de PMI," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201307, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    22. Antonio Accetturo & Andrea Linarello & Andrea Petrella, 2015. "Judiciary efficiency and trade in tasks," ERSA conference papers ersa15p439, European Regional Science Association.
    23. Antoine Berthou & Hélène Ehrhart, 2017. "Trade networks and colonial trade spillovers," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 891-923, September.
    24. Tingvall, Patrik, 2011. "Dynamic Effects of Corruption on Offshoring," Ratio Working Papers 182, The Ratio Institute.
    25. 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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