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Why is Exporting Hard in Some Sectors?

  • Anders AKERMAN
  • Rikard FORSLID
  • OKUBO Toshihiro

This paper models the market entry cost of exporters as dependent on the size of the export market as well as on sector specific factors. We introduce these features in a Melitz trade model with heterogeneous firms. The predictions of our model are tested using Swedish and Japanese firm level data. We find that sector level advertising or sales promotion intensity is an important component of the market entry cost. A larger market size, if anything, lowers entry costs.

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File URL: http://www.rieti.go.jp/jp/publications/dp/13e015.pdf
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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13015.

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Length: 16 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:eti:dpaper:13015
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  1. Costas Arkolakis, 2008. "Market Penetration Costs and the New Consumers Margin in International Trade," NBER Working Papers 14214, National Bureau of Economic Research, Inc.
  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.
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