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Learning, Incomplete Contracts and Ecport Dynamics: Theory and Evidence from French Firms

We consider a model where exporting requires finding a local partner in each market. Contracts are incomplete and exporters must learn the reliability of their partners through experience. In the model, export behavior is state-dependent due to matching frictions, although there are no sunk costs. Better legal institutions alleviate contracting frictions especially in sectors with large contracting problems. Thus, measures of legal quality have a greater positive impact on state dependence and reduce hazard rates by more in those sectors that are more exposed to hold-up problems. Moreover, hazard rates decline with relation age, as unreliable partners are weeded out. We find strong evidence in favor of the model's predictions when testing them with a French dataset which includes information on firm-level exports by destination country.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie1006.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1006.

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Date of creation: Mar 2009
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Handle: RePEc:vie:viennp:1006
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  1. Ines Buono & Harald Fadinger, 2012. "The micro dynamics of exporting: evidence from French firms," Temi di discussione (Economic working papers) 880, Bank of Italy, Economic Research and International Relations Area.
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  13. Felbermayr, Gabriel & Jung, Benjamin, 2011. "Trade intermediation and the organization of exporters," Munich Reprints in Economics 20574, University of Munich, Department of Economics.
  14. Josep M Vilarrubia & Rubén Segura-Cayuela, 2008. "Uncertainty and entry into export markets," 2008 Meeting Papers 661, Society for Economic Dynamics.
  15. Fisman, Raymond & Love, Inessa, 2001. "Trade credit, financial intermediary development, and industry growth," Policy Research Working Paper Series 2695, The World Bank.
  16. Nunn, Nathan, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," Scholarly Articles 4686801, Harvard University Department of Economics.
  17. 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.
  18. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
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  20. Hector Calvo & Gregory Corcos & Emanuel Ornelas & Facundo Albornoz, 2010. "Sequential Exporting," 2010 Meeting Papers 1065, Society for Economic Dynamics.
  21. Willis, Jonathan L. & Ruhl, Kim J., 2014. "New exporter dynamics," Research Working Paper RWP 14-10, Federal Reserve Bank of Kansas City.
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  29. repec:stn:sotoec:1003 is not listed on IDEAS
  30. Hendon, Ebbe & Jacobsen, Hans Jorgen & Sloth, Birgitte, 1996. "The One-Shot-Deviation Principle for Sequential Rationality," Games and Economic Behavior, Elsevier, vol. 12(2), pages 274-282, February.
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