Why do similar firms export differently?

Eaton et al. (2011) underline that firms with similar production costs, entry costs and demand export to different countries. In this theoretical article, I provide a rationale for this feature of the data. I demonstrate that similar firms exporting differently can be explained by a baseline trade-o...

Full description

Saved in:
Bibliographic Details
Published in:Research in economics 2022-12, Vol.76 (4), p.373-385
Main Author: Boitier, Vincent
Format: Article
Language:English
Subjects:
Attractiveness
Competition
Dispersion in strategies
Firms’ location
Potential function
Quantitative Finance
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Eaton et al. (2011) underline that firms with similar production costs, entry costs and demand export to different countries. In this theoretical article, I provide a rationale for this feature of the data. I demonstrate that similar firms exporting differently can be explained by a baseline trade-off between attractiveness and competition that is present in any model with monopolistic competition. I then show that this trade-off also generates valuable theoretical features including distance-related mark-ups, third country effect and equivalence with random utility models.
ISSN:1090-9443
1090-9451
DOI:10.1016/j.rie.2022.09.002