Why Do Homogeneous Firms Export Differently ? A Density Externality Approach of Trade

While the reason why the average exporting firm has a higher productivity than a purely domestic firm is now well understood, the theoretical literature has remained silent on why firms do not enter foreign markets according to an exact hierarchy, as predicted by models à la Mélitz. To this aim, this paper proposes a new model of export choice in which the interactions between firms are characterized by density externalities. This type of interaction is closely related to a Mean Field Game. After showing that such an interaction is included in standard monopolistic competition, in the short run, we show how homogeneous firms can export differently. Moreover in this model, it remains true that more productive firms export on average to less attractive countries. Thence, our model displays a non-exact hierarchy of trade, as the findings of Eaton et al. (2011) suggest