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Entry Costs and Increasing Trade

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  • William F. Lincoln
  • Andrew H. McCallum

Abstract

Using confidential microdata from the US Census, we find that the fraction of manufacturing plants that export rose from 21% in 1987 to 39% in 2006. It has been suggested that similar trends in other countries may have been caused by declining costs of entering foreign markets. Our study tests this hypothesis for the first time. Both reduced form and structural estimation approaches find little evidence that entry costs declined significantly for US firms over this period. Despite the large literature on changes in variable costs to trade such as tariffs, our estimations represent the first analysis of how the costs of entering foreign markets have changed over time.

Suggested Citation

  • William F. Lincoln & Andrew H. McCallum, 2011. "Entry Costs and Increasing Trade," Working Papers 11-38, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:11-38
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    References listed on IDEAS

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    Cited by:

    1. Ryan Monarch, 2014. ""It's Not You, It's Me": Breakup In U.S.-China Trade Relationships," Working Papers 14-08, Center for Economic Studies, U.S. Census Bureau.
    2. William R. Kerr & William F. Lincoln & Prachi Mishra, 2014. "The Dynamics of Firm Lobbying," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 343-379, November.

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