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On Export Duration Puzzles

Les énigmes de la durée des exportations

Carl Gaigne, Bruno Larue and Wendkouni Jean-Baptiste Zongo
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Bruno Larue: ULaval - Université Laval [Québec]
Wendkouni Jean-Baptiste Zongo: Agriculture and Agri-Food Canada, Saskatoon Research Centre - AAFC - Agriculture and Agri-Food

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Abstract: We investigate two puzzles in the export duration literature. The first puzzle has to do with the frequent entries and exits of firms in export markets, which are at odds with the large fixed export costs in such markets. We introduce convex production technologies in a trade model to show how variable marginal costs create direct linkages between export markets. As fixed export costs vary across destinations, more productive firms need not necessarily export to more destinations. Cost convexity implies that the probability of supplying a given export market is adversely affected by positive export shocks in other markets. This is supported by our empirical analysis of bilateral flows for over 200 agri-food products to 176 destinations originating from six large exporting countries. The second puzzle has to do with the paradoxical effect of tariffs reported in empirical export duration studies. When endogeneity is addressed, tariffs increase the probability of an export failure.

Keywords: Cost convexity; Export failure; Gravity; Durée d’exportation; Convexité des couts; Tarifs douaniers; Gravité (search for similar items in EconPapers)
Date: 2022-02-17
New Economics Papers: this item is included in nep-int
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Journal Article: On export duration puzzles (2023) Downloads
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Working Paper: On export duration puzzles (2021) Downloads
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DOI: 10.1111/ajae.12321

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