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Variable Trade Costs, Composition Effects and the Intensive Margin of Trade

Author

Listed:
  • Lionel Fontagné

    (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

  • Antoine Berthou

    (Banque de France)

Abstract

We estimate the elasticity of extra EU French firm-level exports with respect to applied tariffs – a variable trade cost. We implement a method controlling for unobserved firm characteristics driving selection in exports market, and controlling for the multilateral resistance terms. Results confirm a significant negative impact of tariffs on firm-level exports, with one fifth of this impact falling on the induced adjustment in the exporters' product mix. When controlling for this adjustment and focusing on the core exported products, the elasticity of the product-destination firm-level exports with respect to applied tariffs is estimated at about −2.5.

Suggested Citation

  • Lionel Fontagné & Antoine Berthou, 2015. "Variable Trade Costs, Composition Effects and the Intensive Margin of Trade," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01299747, HAL.
  • Handle: RePEc:hal:cesptp:hal-01299747
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01299747
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    References listed on IDEAS

    as
    1. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
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    More about this item

    Keywords

    Multi-product exporters; Trade elasticity; International trade; Firm heterogeneity;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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