Estimating Export-productivity Cutoff Contours with Profit Data: A Novel Threshold Estimation Approach
Peter Egger and
Yulong Wang
Papers from arXiv.org
Abstract:
This paper develops a novel method to estimate firm-specific market-entry thresholds in international economics, allowing fixed costs to vary across firms alongside productivity. Our framework models market entry as an interaction between productivity and observable fixed-cost measures, extending traditional single-threshold models to ones with set-valued thresholds. Applying this approach to Chinese firm data, we estimate export-market entry thresholds as functions of domestic sales and surrogate variables for fixed costs. The results reveal substantial heterogeneity and threshold contours, challenging conventional single-threshold-point assumptions. These findings offer new insights into firm behavior and provide a foundation for further theoretical and empirical advancements in trade research.
Date: 2025-02
New Economics Papers: this item is included in nep-ecm, nep-eff and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2502.03406
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