Firms' export decisions: Selection versus trial-and-error

Mohammad Movahedi, Kiumars Shahbazi and Ahmed Haidara Ould Abdessalam

No 2019-58, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: In this paper, an original and simple theoretical model is developed to better integrate various dimensions of the firms' decision to export. The model sheds light on the affirmations of the founding models of the "new theory of international trade", in particular the role of productivity and sunk costs of exporting in the firms' export decisions. It can also explain stylized facts that seem difficult to reconcile with the implications of the founding models: 1) flows of export market entry and exit are substantial; 2) entry into export markets would be rather gradual in the sense that firms start exporting small quantities and, if they survive, quickly expand their exports.

Keywords: firm heterogeneity; self-selection; sequential exporting (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-int, nep-ore and nep-sbm
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http://www.economics-ejournal.org/economics/discussionpapers/2019-58
https://www.econstor.eu/bitstream/10419/206615/1/1681750783.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201958

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