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What do exporters know?

Author(s): Dickstein, Michael J.; Morales, Eduardo

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Abstract: © The Author(s) 2018. Published by Oxford University Press on behalf of the President and Fellows of Harvard College. All rights reserved. Much of the variation in international trade volume is driven by firms' extensive margin decisions of whether to participate in export markets. We evaluate how the information potential exporters possess influences their decisions. We estimate a model of export participation in which firms weigh the fixed costs of exporting against the forecasted profits from serving a foreign market. We adopt a moment inequality approach, placing weak assumptions on firms' expectations. The framework allows us to test whether firms differ in the information they have about foreign markets. We find that larger firms possess better knowledge of market conditions in foreign countries, even when those firms have not exported in the past. Quantifying the value of information, we show that, in a typical destination, total exports rise while the number of exporters falls when firms have access to better information to forecast export revenues.
Publication Date: 5-Jul-2018
Citation: Dickstein, MJ, Morales, E. (2018). What do exporters know?. Quarterly Journal of Economics, 133 (4), 1753 - 1801. doi:10.1093/qje/qjy015
DOI: doi:10.1093/qje/qjy015
ISSN: 0033-5533
EISSN: 1531-4650
Pages: 1 - 110
Type of Material: Journal Article
Journal/Proceeding Title: Quarterly Journal of Economics
Version: Author's manuscript

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