Export promotion and intra‐industry reallocations

Allan Sørensen

Review of International Economics, 2020, vol. 28, issue 2, 303-319

Abstract: Publicly funded/subsidized export promotion agencies reducing informational barriers to export and thus firm‐level fixed/sunk costs of exporting are present in most countries. This paper develops a two‐country one‐sector heterogeneous firms model with origin‐specific publicly funded export promotion agencies and shows how the public good nature of export‐relevant information and the ability to engage in global public affairs may rationalize the existence of such agencies. A novel finding of the model is that gains from export promotion are shared with the trade partner via intra‐industry reallocations.

Date: 2020
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