Heterogeneous Exporter Behaviour: Exploring the Evidence for Sunk-Costs and Hysteresis

Anne Marie Gleeson () and Frances Ruane ()
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Anne Marie Gleeson: Trinity College Dublin

No WP196, Papers from Economic and Social Research Institute (ESRI)

Abstract: Recent economic literature suggests the importance of sunk costs and hysteresis in explaining export patterns in international trade. To explore their empirical importance, we present a new conceptual framework that distinguishes six different types of exporter behaviour, and apply this framework to a unique longitudinal data set on Irish manufacturing. Our analysis allows us to identify significant numbers of manufacturers who engage in ?exporter re-switching behaviour?. The magnitude of these numbers leads us to question the widespread importance of sunk costs. In response to export-market shocks, we find strong evidence of both heterogeneous exporter responses and hysteresis.

Keywords: heterogeneous exporters; sunk costs; re-switching behaviour (search for similar items in EconPapers)
JEL-codes: E32 F14 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2007-07
New Economics Papers: this item is included in nep-int and nep-mac
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