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Export Decision under Risk

Author

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

Abstract

Using firm and industry data, we establish two facts: (i) Uncertainty about demand conditions not only reduces export sales and exporting probabilities but also makes exports less sensitive to trade policy; (ii) the most productive exporters are more affected by higher industry-wide expenditure volatility than the least productive exporters. We rationalize these regularities by developing a new firmbased 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 cost weaken this effect. Our results hold for a large class of consumer utility functions.

Suggested Citation

  • José De Sousa & Anne-Célia Disdier & Carl Gaigné, 2016. "Export Decision under Risk," CESifo Working Paper Series 6134, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6134
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    firm exports; demand uncertainty; risk aversion; expenditure volatility; skewness;

    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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