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Export sunk costs: can spillovers open the bottleneck? ‐ determinants of Chilean wine exports

Savo, Victor LU and Wik, Marcus LU (2011) NEKM01 20111
Department of Economics
Abstract (Swedish)
This thesis follows previous research on sunk cost associated with exports of heterogeneous goods. The impact of sunk cost is evaluated at the industry level, using the Chilean wine industry as a case study. Data for export flows to 92 destination countries over the period 1990 – 2006 shows strong evidence on the importance of sunk costs for future export decisions, and the results are statistically significant for linear as well as non-linear estimation.
Using three different export diversification indices, the issue of potential sunk cost spillover effects is investigated. The purpose is to see whether the exports from other industries can create spillover effects that reduce the sunk costs associated with engaging in wine exports.... (More)
This thesis follows previous research on sunk cost associated with exports of heterogeneous goods. The impact of sunk cost is evaluated at the industry level, using the Chilean wine industry as a case study. Data for export flows to 92 destination countries over the period 1990 – 2006 shows strong evidence on the importance of sunk costs for future export decisions, and the results are statistically significant for linear as well as non-linear estimation.
Using three different export diversification indices, the issue of potential sunk cost spillover effects is investigated. The purpose is to see whether the exports from other industries can create spillover effects that reduce the sunk costs associated with engaging in wine exports. This topic is examined through a dynamic random-effects probit model, but the data shows however, no evidence of such spillover effects.
The conclusion is that the sunk costs associated with the initiation of exports of heterogeneous goods is bounded by the intrinsic characteristics of the goods themselves, and therefore not transferrable between industries. Therefore, further studies on intra-industry spillover effects would be relevant that evaluate the effects of cooperation within heterogeneous good industries. (Less)
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author
Savo, Victor LU and Wik, Marcus LU
supervisor
organization
course
NEKM01 20111
year
type
H1 - Master's Degree (One Year)
subject
keywords
Heterogeneous goods, Sunk costs, Spillovers, Chile, Wine.
language
English
id
1976031
date added to LUP
2011-06-15 13:30:09
date last changed
2011-06-15 13:30:09
@misc{1976031,
  abstract     = {This thesis follows previous research on sunk cost associated with exports of heterogeneous goods. The impact of sunk cost is evaluated at the industry level, using the Chilean wine industry as a case study. Data for export flows to 92 destination countries over the period 1990 – 2006 shows strong evidence on the importance of sunk costs for future export decisions, and the results are statistically significant for linear as well as non-linear estimation. 
Using three different export diversification indices, the issue of potential sunk cost spillover effects is investigated. The purpose is to see whether the exports from other industries can create spillover effects that reduce the sunk costs associated with engaging in wine exports. This topic is examined through a dynamic random-effects probit model, but the data shows however, no evidence of such spillover effects.
The conclusion is that the sunk costs associated with the initiation of exports of heterogeneous goods is bounded by the intrinsic characteristics of the goods themselves, and therefore not transferrable between industries. Therefore, further studies on intra-industry spillover effects would be relevant that evaluate the effects of cooperation within heterogeneous good industries.},
  author       = {Savo, Victor and Wik, Marcus},
  keyword      = {Heterogeneous goods,Sunk costs,Spillovers,Chile,Wine.},
  language     = {eng},
  note         = {Student Paper},
  title        = {Export sunk costs: can spillovers open the bottleneck? ‐ determinants of Chilean wine exports},
  year         = {2011},
}