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Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Market

Federico Ciliberto () and Ina C. Jäkel ()
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Ina C. Jäkel: Department of Economics and Business Economics, Aarhus University, Denmark, Postal: 8210 Aarhus V, Denmark

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

Abstract: In many countries, exports are highly concentrated among a few "superstar" firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 54.3 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: (i) overstating the probability that firms would start exporting to a market following tariff elimination by 8 percentage points; and, (ii) overstating the probability that firms would stop exporting to a market if tariffs were imposed by 7.5 percentage points. We also show that competitive effects vary across export markets and competitors. This heterogeneity in the competitive effects implies that there exist multiple equilibria, both in the identity and in the number of firms.

Keywords: Export participation; Strategic interaction; Multiple equilibria; Trade policy (search for similar items in EconPapers)
JEL-codes: F12 F14 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2017-09-07
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