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How Exporters Grow

Author

Listed:
  • Doireann Fitzgerald
  • Stefanie Haller
  • Yaniv Yedid-Levi

Abstract

We document how export quantities and prices evolve after entry to a market. Controlling for marginal cost, and taking account of selection on idiosyncratic demand, there are economically and statistically significant dynamics of quantities, but no dynamics of prices. To match these facts, we estimate a model where firms invest in customer base through non-price actions (e.g. marketing and advertising), and learn gradually about their idiosyncratic demand. The model matches quantity, price and exit moments. Parameter estimates imply costs of adjusting investment in customer base, and slow learning about demand, both of which generate sluggish responses of sales to shocks.

Suggested Citation

  • Doireann Fitzgerald & Stefanie Haller & Yaniv Yedid-Levi, 2017. "How Exporters Grow," Working Papers 201702, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:201702
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    File URL: http://hdl.handle.net/10197/8363
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Exporter dynamics; Customer base; Learning;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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