Second Thoughts on Exporter Productivity

Philipp Schröder and Allan Sørensen

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: Empirical literature has established a positive link between firm productivity and export status, yet notable exceptions exist. The present paper shows that the underlying theory (Melitz, 2003) is in fact able to accommodate the rule as well as the exception. The fulcrum of the argument is the tension between empirical work measuring productivity based on average cost information, and theoretical work representing productivity by marginal cost. In a heterogeneous firms trade model, we compute productivity based on average cost and find that around the export-indifferent firm, exporters will be less productive than non-exporters. Furthermore, we show that this effect may feed through at the industry level.

Keywords: Intra-industry trade; firm productivity; monopolistic competition; heterogeneous firms (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 (search for similar items in EconPapers)
Pages: 18
Date: 2009-02-09
New Economics Papers: this item is included in nep-eff and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2009-03

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