Why Do Homogeneous Firms Export Differently ? A Density Externality Approach of Trade

Vincent Boitier () and Antoine Vatan ()
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Vincent Boitier: Université paris 1 Panthéon Sorbonne et PSE
Antoine Vatan: CREST

No 2014-06, Working Papers from Center for Research in Economics and Statistics

Abstract: While the reason why the average exporting firm has a higher productivity than a purely domestic firm is now well understood, the theoretical literature has remained silent on why firms do not enter foreign markets according to an exact hierarchy, as predicted by models à la Mélitz. To this aim, this paper proposes a new model of export choice in which the interactions between firms are characterized by density externalities. This type of interaction is closely related to a Mean Field Game. After showing that such an interaction is included in standard monopolistic competition, in the short run, we show how homogeneous firms can export differently. Moreover in this model, it remains true that more productive firms export on average to less attractive countries. Thence, our model displays a non-exact hierarchy of trade, as the findings of Eaton et al. (2011) suggest

Keywords: Export Choice; Dispersion in Strategies; Density Externalities; Trade Externalities; Sequential Exporting (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Pages: 29
Date: 2014-02
New Economics Papers: this item is included in nep-dcm and nep-int
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