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Transport infraestructure, sunk costs and firms' export behaviour

  • Pedro Albarrán

    ()

  • Raquel Carrasco

    ()

  • Adelheid Holl

    ()

Transport infrastructure investment reduces the cost of distance and enables firms to establish contacts over larger distances. We study the impact of transport-cost reductions on firms’ export behaviour, accounting for the role of entry costs and other firms’ characteristics. Using Spanish data we estimate dynamic probability models controlling for firms’ unobserved heterogeneity and for the simultaneity of firms’ export and location decisions. Our results provide support for a positive effect of domestic transport improvements on firms’ exporting probability for small and medium sized firms. We find a strong effect of previous export experience, suggesting high entry costs into export markets.

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File URL: http://e-archivo.uc3m.es/bitstream/10016/5207/2/09-22-13.pdf
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Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we092213.

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Date of creation: Jun 2009
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Handle: RePEc:cte:werepe:we092213
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  2. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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