The Rewards of Self-Discovery: Learning and Firm Exporter Dynamics

Cebreros Alfonso

No 2016-08, Working Papers from Banco de México

Abstract: I develop and estimate a model of export dynamics featuring self-discovery that accounts well for new exporter dynamics:(a) continuation rates that are increasing with tenure, and (b) growth rates of export sales that are decreasing with tenure. The option value generated by the acquisition of more information is key to understanding firm dynamics as the discovery stage lasts as long as this option value is positive. I use the model to study the impact of export promotion policies that temporarily subsidize the fixed costs of exporting. These policies can result in long-lived increases in aggregate trade, but their effectiveness crucially depends on the speed of learning.

Keywords: Learning; Uncertainty; Firm dynamics; Dynamic export supply; Option value (search for similar items in EconPapers)
JEL-codes: C15 D21 D22 D83 F12 F14 L11 L25 (search for similar items in EconPapers)
Date: 2016-06
New Economics Papers: this item is included in nep-int
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