Learning, Prices, and firm dynamics

Paulo S. R. Bastos, Daniel Dias, Olga A. Timoshenko, Paulo S. R. Bastos, Daniel Dias and Olga A. Timoshenko
Authors registered in the RePEc Author Service: Olga A. Timoshenko, Daniel Dias and Paulo Bastos

No 7667, Policy Research Working Paper Series from The World Bank

Abstract: This paper documents new facts about the joint evolution of firm performance and prices in international markets and proposes a theory of firm dynamics emphasizing the interaction between learning about demand and quality choice to explain the observed patterns. Using data from the Portuguese manufacturing sector, the paper documents that: (1) within narrow product categories, firms with longer spells of activity in export destinations tend to ship larger quantities at similar prices, thus obtaining larger export revenue; (2) older exporters tend to import more expensive inputs; and (3) revenue growth within destinations (conditional on initial size) tends to decline with market experience. The authors develop a model of endogenous input and output quality choices in a learning environment that is able to quantitatively account for these patterns. Counterfactual simulations reveal that minimum quality standards on exports reduce welfare by lowering entry in export markets and reallocating resources from old and large toward young and small firms.

Keywords: International Trade and Trade Rules; Construction Industry; Textiles; Apparel&Leather Industry; Business Cycles and Stabilization Policies; General Manufacturing; Common Carriers Industry; Food&Beverage Industry; Plastics&Rubber Industry; Pulp&Paper Industry; Trade and Services; Transport Services; National Governance; Social Analysis; Government Policies; Youth and Governance; Quality of Life&Leisure (search for similar items in EconPapers)
Date: 2016-05-10
New Economics Papers: this item is included in nep-bec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://documents.worldbank.org/curated/en/974531467995659059/pdf/WPS7667.pdf (application/pdf)

Related works:
Journal Article: Learning, prices and firm dynamics (2018)
Journal Article: Learning, prices and firm dynamics (2018)
Working Paper: Learning, Prices, and Firm Dynamics (2017)
Working Paper: Learning, Prices, and Firm Dynamics (2017)
Working Paper: Learning, Prices, and Firm Dynamics (2017)
Working Paper: Learning, Prices, and Firm Dynamics (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7667

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