Export market penetration dynamics

Joseph Steinberg

Journal of International Economics, 2023, vol. 145, issue C

Abstract: I develop a dynamic theory of exporting that synthesizes two approaches: static models, in which exporting costs depend on the number of foreign customers a firm serves in the present; and dynamic models, in which these costs depend on whether a firm exported in the past. The theory simultaneously accounts for two sets of established empirical findings: (i) larger markets attract exports from more firms and these exports are more concentrated; and (ii) new exporters are generally smaller and more likely to exit than incumbents. It also accounts for a new set of findings from Brazilian microdata showing that differences between new exporters and incumbents are more pronounced in larger markets. When calibrated to match all of these findings, the theory predicts that trade reforms cause greater but also slower trade growth in smaller markets.

Keywords: Market penetration; Export participation; New-exporter dynamics; Trade liberalization (search for similar items in EconPapers)
JEL-codes: F10 F12 F14 F15 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:145:y:2023:i:c:s0022199623000934

DOI: 10.1016/j.jinteco.2023.103807

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