Entry on Export Markets and Firm-Level Performance Growth: Intra-Industrial Convergence or Divergence?

Florian Mayneris
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Florian Mayneris: CORE

No 2010.153, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper investigates theoretically and empirically the endogenous investment decision of firms conditioning on export decision. It shows that theoretically, whatever the form of preferences, firms that start exporting invest more and grow more than the others. However, it is shown that when preferences are CES, within each category of firms (domestic and switchers), initial productivity and investment are strategic complements, inducing intra-industrial divergence. On the contrary, when preferences are quadratic, initial productivity and investment are strategic substitutes: less productive firms invest more and grow more than the others, inducing intra-industrial convergence. Empirical results on French data support the predictions of the quadratic preferences model.

Keywords: Export Decision; Investment; Firm Heterogeneity (search for similar items in EconPapers)
JEL-codes: D21 D24 F12 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent, nep-int and nep-sbm
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2010.153

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