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Heterogeneous Exporter Behaviour: Exploring the Evidence for Sunk-Costs and Hysteresis

  • Anne Marie Gleeson

    ()

    (Trinity College Dublin)

  • Frances Ruane

    (Economic and Social Research Institute (ESRI))

Recent economic literature suggests the importance of sunk costs and hysteresis in explaining export patterns in international trade. To explore their empirical importance, we present a new conceptual framework that distinguishes six different types of exporter behaviour, and apply this framework to a unique longitudinal data set on Irish manufacturing. Our analysis allows us to identify significant numbers of manufacturers who engage in ?exporter re-switching behaviour?. The magnitude of these numbers leads us to question the widespread importance of sunk costs. In response to export-market shocks, we find strong evidence of both heterogeneous exporter responses and hysteresis.

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File URL: http://www.esri.ie/UserFiles/publications/20070927144440/WP196.pdf
File Function: First version, 2007
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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP196.

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Length: 21 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:esr:wpaper:wp196
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  1. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, May.
  2. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
  3. Andrew B Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2000. "Plants and productivity in international trade," Working Papers 00-08, Center for Economic Studies, U.S. Census Bureau.
  4. Dixit, Avinash K, 1989. "Entry and Exit Decisions under Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 620-38, June.
  5. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2004. "Comparative Advantage and Heterogeneous Firms," CEP Discussion Papers dp0643, Centre for Economic Performance, LSE.
  6. Richard Baldwin & Paul R. Krugman, 1986. "Persistent Trade Effects of Large Exchage Rate Shocks," NBER Working Papers 2017, National Bureau of Economic Research, Inc.
  7. Andrew B. Bernard & Joachim Wagner, 1998. "Export Entry and Exit by German Firms," NBER Working Papers 6538, National Bureau of Economic Research, Inc.
  8. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2001. "Market entry costs, producer heterogeneity and export dynamics," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 03-10, Indian Statistical Institute, New Delhi, India.
  9. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  10. Anne Marie Gleeson & Frances Ruane, 2007. "Irish Manufacturing Export Dynamics: Evidence of Exporter Heterogeneity in Boom and Slump Periods," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(2), pages 375-388, July.
  11. David Greenaway & Richard Kneller, 2007. "Firm heterogeneity, exporting and foreign direct investment," Economic Journal, Royal Economic Society, vol. 117(517), pages F134-F161, 02.
  12. Hansson, Pär & Lundin, Nan Nan, 2003. "Exports as an Indicator on or Promoter of Successful Swedish Manufacturing Firms in the 1990s," Working Paper Series 189, Trade Union Institute for Economic Research.
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