Learning, incomplete contracts and export dynamics: theory and evidence from French firms
Ines Buono () and
No 883, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area
Using French firm-level trade data, we provide empirical support for a heterogeneous firm model in which exporting requires finding a local partner in each market: contracts are incomplete, exporters must learn the reliability of their partners through experience, and export behaviour is state-dependent due to matching frictions. As predicted by our theoretical model, we find that better legal institutions ease contracting frictions especially in sectors with serious contracting problems. This increases state dependence by more in those sectors. Finally, hazard rates depend on the quality of local legal institutions and decline with the age of the relationship, as unreliable partners are weeded out.
Keywords: trade dynamics; learning; institutions; state dependence; firm-level trade data. (search for similar items in EconPapers)
JEL-codes: F12 F14 L14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-int
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Journal Article: Learning, incomplete contracts and export dynamics: Theory and evidence from French firms (2014)
Working Paper: Learning, Incomplete Contracts and Ecport Dynamics: Theory and Evidence from French Firms (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_883_12
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