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Fixed Export Costs and Export Behavior

Author

Listed:
  • Luis Castro

    (Universidad Privada Boliviana, LaPaz, Boliviana)

  • Ben Li

    (Boston College)

  • Keith Maskus

    (University of Colorado at Boulder)

  • Yiqing Xie

    (Fudan University, Shanghai, China)

Abstract
This paper provides a direct test of how fixed export costs and productivity jointly determine firm-level export behavior. Using Chilean data, we construct indices of fixed export costs for each industry-region-year triplet and match them to domestic firms. Our empirical results show that firms facing higher fixed export costs are less likely to export, while those with higher productivity export more. These outcomes are the foundation of the widely-used sorting mechanism in trade models with firm heterogeneity. A particularly novel finding is that high-productivity nonexporters face greater fixed export costs than low-productivity exporters. We also find that the substitution between fixed export costs and productivity in determining export decisions is weaker for firms with higher productivity. Finally, both larger fixed export costs and greater within-triplet productivity dispersion raise the export volume of the average exporter.

Suggested Citation

  • Luis Castro & Ben Li & Keith Maskus & Yiqing Xie, 2014. "Fixed Export Costs and Export Behavior," Boston College Working Papers in Economics 855, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:855
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    More about this item

    Keywords

    Sorting; firm heterogeneity; fixed export costs;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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