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Heterogeneous trade elasticity and managerial skills

Author

Listed:
  • Maria Bas

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Lionel Fontagné

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris)

  • Irene Iodice

    (Universität Bielefeld = Bielefeld University, CESifo - CESifo)

  • Gianluca Orefice

    (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, CESifo - CESifo)

Abstract

This paper investigates the role of firms' managerial skills in the heterogeneous reaction of exporters to common exogenous changes in their international competitiveness (here captured by changes in the real exchange rate). Relying on a simple theoretical framework, we show that firms with better managerial skills have higher profits, market power and are able to adapt their markup more when faced with a competitiveness shock. We test this prediction relying on detailed firm-product-destination level export data from France for the period 1995-2007 matched with specific information on the firms' share of managers. Our findings show that managerial intensive firms have larger exporter price elasticity to real exchange rate variations. In the wake of a depreciation, exporters whose management intensity is one standard deviation higher than the average, increase their prices by 51% to 73% more than the average exporter. This finding is robust to alternative explanations suggested by the literature.

Suggested Citation

  • Maria Bas & Lionel Fontagné & Irene Iodice & Gianluca Orefice, 2025. "Heterogeneous trade elasticity and managerial skills," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-05368414, HAL.
    • Handle: RePEc:hal:cesptp:halshs-05368414
    DOI: 10.1016/j.jinteco.2025.104093
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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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