Learning, Incomplete Contracts and Ecport Dynamics: Theory and Evidence from French Firms
Ines Buono () and
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Ines Buono: http://www.univie.ac.at/Wirtschaftswissenschaften
Vienna Economics Papers from University of Vienna, Department of Economics
We consider a model where exporting requires finding a local partner in each market. Contracts are incomplete and exporters must learn the reliability of their partners through experience. In the model, export behavior is state-dependent due to matching frictions, although there are no sunk costs. Better legal institutions alleviate contracting frictions especially in sectors with large contracting problems. Thus, measures of legal quality have a greater positive impact on state dependence and reduce hazard rates by more in those sectors that are more exposed to hold-up problems. Moreover, hazard rates decline with relation age, as unreliable partners are weeded out. We find strong evidence in favor of the model's predictions when testing them with a French dataset which includes information on firm-level exports by destination country.
JEL-codes: F12 F14 L14 (search for similar items in EconPapers)
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Journal Article: Learning, incomplete contracts and export dynamics: Theory and evidence from French firms (2014)
Working Paper: Learning, incomplete contracts and export dynamics: theory and evidence from French firms (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:1006
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