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Sequential exporting across countries and products

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  • Albornoz, Facundo
  • Calvo-Pardo, Héctor
  • Corcos, Gregory
  • Ornelas, Emanuel

Abstract

How do exporters expand their product scope and geographical presence? We argue that new exporters are uncertain about their profitability in different countries and products, but learn it as they start to export. As a consequence, exporters add products and countries sequentially, in an interdependent process. Exploiting disaggregated data on French exporters, we find empirical support consistent with such a mechanism, where firms learn from their initial export experiences and then adjust their sales, number of products and destination countries accordingly. Our results indicate that part of the learning is firm-specific, and not merely product- or market-specific. Furthermore, we find that firms tend to expand in the sub-extensive margin first by widening product scope within a destination and later by entering new destinations; and that firms' core products are particularly resilient despite being used to "test the waters" when entering additional countries.

Suggested Citation

  • Albornoz, Facundo & Calvo-Pardo, Héctor & Corcos, Gregory & Ornelas, Emanuel, 2021. "Sequential exporting across countries and products," LSE Research Online Documents on Economics 114383, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:114383
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    References listed on IDEAS

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    Cited by:

    1. Albornoz, Facundo & Brambilla, Irene & Ornelas, Emanuel, 2021. "Firm export responses to tariff hikes," LSE Research Online Documents on Economics 113920, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    export dynamics; experimentation; uncertainty; multiproduct firms; market inter-dependence;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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