Sequential Exporting ∗
Firms need to incur substantial sunk costs to break in foreign markets, yet many give up exporting shortly after their first experience, which typically involves very small sales. Conversely, other new exporters shoot up their foreign sales and expand to new destinations. We investigate a simple the...
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ftciteseerx:oai:CiteSeerX.psu:10.1.1.170.9658 2023-05-15T18:12:46+02:00 Sequential Exporting ∗ Facundo Albornoz Héctor F. Calvo Pardo Emanuel Ornelas Gregory Corcos The Pennsylvania State University CiteSeerX Archives 2010 application/pdf http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.170.9658 http://gregory.corcos.free.fr/acco.pdf en eng http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.170.9658 http://gregory.corcos.free.fr/acco.pdf Metadata may be used without restrictions as long as the oai identifier remains attached to it. http://gregory.corcos.free.fr/acco.pdf JEL Codes L21 F13 F15 D83 Keywords Export dynamics trade liberalization experimentation uncertainty We thank Costas Arkolakis Sami Berlinski David Atkin Jordi Blanes-i-Vidal John Bluedorn Holger Breinlich text 2010 ftciteseerx 2016-01-07T16:03:15Z Firms need to incur substantial sunk costs to break in foreign markets, yet many give up exporting shortly after their first experience, which typically involves very small sales. Conversely, other new exporters shoot up their foreign sales and expand to new destinations. We investigate a simple theoretical mechanism that can rationalize these patterns. A firm discovers its profitability as exporter only after actually engaging in exporting. The profitability is positively correlated over time and across destinations. Accordingly, once the firm learns how good it is as an exporter, it adjusts quantities and decides whether to exit and whether to serve new destinations. Thus, it is the possibility of profitable expansion at both the intensive and extensive margins what makes incurring the sunk costs to enter a single foreign market worthwhile despite the high failure rates. Using a census of Argentinean firm-level manufacturing exports from 2002 to 2007, we find empirical support for several implications of our proposed mechanism, indicating that the practice of “sequential exporting ” is pervasive. Sequential exporting has broad but subtle implications for trade policy. For example, a reduction in trade barriers in a country has delayed entry effects in its own market, while also promoting entry in other markets. This trade externality poses challenges for the quantification of the effects of trade liberalization programs, while suggesting neglected but critical implications of international trade agreements. Text sami Unknown |
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English |
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JEL Codes L21 F13 F15 D83 Keywords Export dynamics trade liberalization experimentation uncertainty We thank Costas Arkolakis Sami Berlinski David Atkin Jordi Blanes-i-Vidal John Bluedorn Holger Breinlich |
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JEL Codes L21 F13 F15 D83 Keywords Export dynamics trade liberalization experimentation uncertainty We thank Costas Arkolakis Sami Berlinski David Atkin Jordi Blanes-i-Vidal John Bluedorn Holger Breinlich Facundo Albornoz Héctor F. Calvo Pardo Emanuel Ornelas Gregory Corcos Sequential Exporting ∗ |
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JEL Codes L21 F13 F15 D83 Keywords Export dynamics trade liberalization experimentation uncertainty We thank Costas Arkolakis Sami Berlinski David Atkin Jordi Blanes-i-Vidal John Bluedorn Holger Breinlich |
description |
Firms need to incur substantial sunk costs to break in foreign markets, yet many give up exporting shortly after their first experience, which typically involves very small sales. Conversely, other new exporters shoot up their foreign sales and expand to new destinations. We investigate a simple theoretical mechanism that can rationalize these patterns. A firm discovers its profitability as exporter only after actually engaging in exporting. The profitability is positively correlated over time and across destinations. Accordingly, once the firm learns how good it is as an exporter, it adjusts quantities and decides whether to exit and whether to serve new destinations. Thus, it is the possibility of profitable expansion at both the intensive and extensive margins what makes incurring the sunk costs to enter a single foreign market worthwhile despite the high failure rates. Using a census of Argentinean firm-level manufacturing exports from 2002 to 2007, we find empirical support for several implications of our proposed mechanism, indicating that the practice of “sequential exporting ” is pervasive. Sequential exporting has broad but subtle implications for trade policy. For example, a reduction in trade barriers in a country has delayed entry effects in its own market, while also promoting entry in other markets. This trade externality poses challenges for the quantification of the effects of trade liberalization programs, while suggesting neglected but critical implications of international trade agreements. |
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The Pennsylvania State University CiteSeerX Archives |
format |
Text |
author |
Facundo Albornoz Héctor F. Calvo Pardo Emanuel Ornelas Gregory Corcos |
author_facet |
Facundo Albornoz Héctor F. Calvo Pardo Emanuel Ornelas Gregory Corcos |
author_sort |
Facundo Albornoz |
title |
Sequential Exporting ∗ |
title_short |
Sequential Exporting ∗ |
title_full |
Sequential Exporting ∗ |
title_fullStr |
Sequential Exporting ∗ |
title_full_unstemmed |
Sequential Exporting ∗ |
title_sort |
sequential exporting ∗ |
publishDate |
2010 |
url |
http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.170.9658 http://gregory.corcos.free.fr/acco.pdf |
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http://gregory.corcos.free.fr/acco.pdf |
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http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.170.9658 http://gregory.corcos.free.fr/acco.pdf |
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Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
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