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Bridging Trade Barriers: Evaluating Models of Multi-Product Exporters

Arnarson, Björn Thor LU (2015) In Working Paper / Department of Economics, School of Economics and Management, Lund University
Abstract
In this paper we investigate the impact of a decrease in trade costs on firm decisions to export. The main contribution of this paper is to evaluate empirically the theoretical predictions of several models of multi-product exporters. The focus is on the firm export entry decision and the within firm adjustment regarding product scope and intensity. For identification, a quasi-natural experiment, the introduction of the Öresund bridge between southern Sweden and Denmark, is used to analyse the impact on firm behaviour. Using a difference-in-difference methodology, firms in the ’treated’ municipality, Malmö, are compared to firms in the more geographically distant Gothenburg ('control'). For the 'treated' firms a theoretically consistent... (More)
In this paper we investigate the impact of a decrease in trade costs on firm decisions to export. The main contribution of this paper is to evaluate empirically the theoretical predictions of several models of multi-product exporters. The focus is on the firm export entry decision and the within firm adjustment regarding product scope and intensity. For identification, a quasi-natural experiment, the introduction of the Öresund bridge between southern Sweden and Denmark, is used to analyse the impact on firm behaviour. Using a difference-in-difference methodology, firms in the ’treated’ municipality, Malmö, are compared to firms in the more geographically distant Gothenburg ('control'). For the 'treated' firms a theoretically consistent positive effect is found on firm entry into exporting, aggregate firm trade flow and the number of products exported. While the models of multi-product exporters evaluated do not provide a clear theoretical prediction regarding the impact on average trade value per product, we find a sizeable significant effect. Decomposing the results, we find that the main effects are driven by firms in the manufacturing sectors. The results are robust to extending the sample to include Stockholm as well as exports to alternative destinations. (Less)
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author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
International Trade, Multi-Product Firms, Infrastructure, Market Access, Quasi-Natural Experiment, Trade Costs
in
Working Paper / Department of Economics, School of Economics and Management, Lund University
issue
6
pages
37 pages
publisher
Department of Economics, Lund Universtiy
language
English
LU publication?
yes
id
f17e3a1e-c7f5-4fdf-8c65-cf60bd8a8088 (old id 5049233)
alternative location
http://swopec.hhs.se/lunewp/abs/lunewp2015_006.htm
date added to LUP
2015-02-12 10:02:10
date last changed
2016-04-16 08:23:54
@misc{f17e3a1e-c7f5-4fdf-8c65-cf60bd8a8088,
  abstract     = {In this paper we investigate the impact of a decrease in trade costs on firm decisions to export. The main contribution of this paper is to evaluate empirically the theoretical predictions of several models of multi-product exporters. The focus is on the firm export entry decision and the within firm adjustment regarding product scope and intensity. For identification, a quasi-natural experiment, the introduction of the Öresund bridge between southern Sweden and Denmark, is used to analyse the impact on firm behaviour. Using a difference-in-difference methodology, firms in the ’treated’ municipality, Malmö, are compared to firms in the more geographically distant Gothenburg ('control'). For the 'treated' firms a theoretically consistent positive effect is found on firm entry into exporting, aggregate firm trade flow and the number of products exported. While the models of multi-product exporters evaluated do not provide a clear theoretical prediction regarding the impact on average trade value per product, we find a sizeable significant effect. Decomposing the results, we find that the main effects are driven by firms in the manufacturing sectors. The results are robust to extending the sample to include Stockholm as well as exports to alternative destinations.},
  author       = {Arnarson, Björn Thor},
  keyword      = {International Trade,Multi-Product Firms,Infrastructure,Market Access,Quasi-Natural Experiment,Trade Costs},
  language     = {eng},
  note         = {Working Paper},
  number       = {6},
  pages        = {37},
  publisher    = {Department of Economics, Lund Universtiy},
  series       = {Working Paper / Department of Economics, School of Economics and Management, Lund University},
  title        = {Bridging Trade Barriers: Evaluating Models of Multi-Product Exporters},
  year         = {2015},
}