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Why is Exporting Hard in Some Sectors?

Anders Akerman (), Rikard Forslid () and Toshihiro Okubo ()

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper models the market entry cost of exporters as dependent on the size of the export market as well as on sector specific factors. We introduce these features in a Melitz trade model with heterogeneous firms. The predictions of our model are tested using Swedish and Japanese firm level data. We find that sector level advertising or sales promotion intensity is an important component of the market entry cost. A larger market size, if anything, lowers entry costs.

New Economics Papers: this item is included in nep-bec and nep-int
Date: 2013-03
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