Firms' Exporting Behavior under Quality Constraints

Juan Hallak and Jagadeesh Sivadasan

No 99, Working Papers from Universidad de San Andres, Departamento de Economia

Abstract: We develop a model of international trade with export quality requirements and two dimensions of rm heterogeneity. In addition to \productivity", rms are also heterogeneous in their \caliber" { the ability to produce quality using fewer xed inputs. Compared to single-attribute models of rm heterogeneity emphasizing either productivity or the ability to produce quality, our model provides a more nuanced characterization of rms' exporting behavior. In particular, it explains the empirical fact that rm size is not monotonically related with export status: there are small rms that export and large rms that only operate in the domestic market. The model also delivers novel testable predictions. Conditional on size, exporters are predicted to sell products of higher quality and at higher prices, pay higher wages and use capital more intensively. These predictions, although apparently intuitive, cannot be derived from single-attribute models of rm heterogeneity as they imply no variation in export status after size is controlled for. We nd strong support for the predictions of our model in manufacturing establishment datasets for India, the U.S., Chile, and Colombia.

Keywords: Productivity; quality; exports; firm heterogeneity (search for similar items in EconPapers)
JEL-codes: F10 F12 F14 (search for similar items in EconPapers)
Date: 2010-03, Revised 2010-03
New Economics Papers: this item is included in nep-cwa, nep-eff and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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https://webacademicos.udesa.edu.ar/pub/econ/doc99.pdf First version, 2010 (application/pdf)

Related works:
Working Paper: Firms' Exporting Behavior under Quality Constraints (2011)
Working Paper: Firms' Exporting Behavior under Quality Constraints (2009)
Working Paper: Firms' Exporting Behavior under Quality Constraints (2009)
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