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Sequential exporting

Facundo Albornoz (), Hector Calvo Pardo (), Gregory Corcos and Emanuel Ornelas

Journal of International Economics, 2012, vol. 88, issue 1, 17-31

Abstract: Many new exporters give up exporting very shortly, despite substantial entry costs; others shoot up foreign sales and expand to new destinations. We develop a model based on experimentation to rationalize these and other dynamic patterns of exporting firms. We posit that individual export profitability, while initially uncertain, is positively correlated over time and across destinations. This leads to “sequential exporting,” where the possibility of profitable expansion at the intensive and extensive margins makes initial entry costs worthwhile despite high failure rates. Firm-level evidence from Argentina's customs, which would be difficult to reconcile with existing models, strongly supports this mechanism.

Keywords: Export dynamics; Experimentation; Uncertainty; Learning; Option value (search for similar items in EconPapers)
JEL-codes: F10 D21 (search for similar items in EconPapers)
Date: 2012
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Related works:
Working Paper: Sequential Exporting (2010) Downloads
Working Paper: Sequential Exporting (2010) Downloads
Working Paper: Sequential Exporting (2010) Downloads
Working Paper: Sequential exporting (2010) Downloads
Working Paper: Sequential Exporting (2010)
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