Market Entry Costs, Producer Heterogeneity, and Export Dynamics

Sanghamitra Das, Mark Roberts and James Tybout

No 8629, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: As the exchange rate, foreign demand, production costs and export promotion policies evolve, manufacturing firms are continually faced with two issues: Whether to be an exporter, and if so, how much to export. We develop a dynamic structural model of export supply that characterizes these two decisions and estimate the model using plant-level panel data on Colombian chemical producers. The model embodies uncertainty, plant-level heterogeneity in export profits, and sunk entry costs for plants breaking into foreign markets. Our estimates, and the simulation exercises that they support, yield several implications. First, entry costs are typically large, but vary greatly across producers. Second, there is substantial cross-plant heterogeneity in gross expected export profit streams. Third, these large entry costs make expectations about future exporting conditions important for many producers, so changes in the exchange rate regime that are credible induce much more entry than those that are not. Fourth, however, most of the entry and exit takes place among marginal exporters who contribute little to aggregate export revenues. Finally, subsidies on export earnings have a much larger impact on export revenues (per dollar spent) than subsidies that reduce the entry costs faced by new exporters.

JEL-codes: F10 L10 (search for similar items in EconPapers)
Date: 2001-12
New Economics Papers: this item is included in nep-ent and nep-mic
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (88)

Published as Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, 05.

Downloads: (external link)
http://www.nber.org/papers/w8629.pdf (application/pdf)

Related works:
Journal Article: Market Entry Costs, Producer Heterogeneity, and Export Dynamics (2007)
Working Paper: Market entry costs, producer heterogeneity and export dynamics (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:8629

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8629

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().