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How Exporters Grow
Date Issued
2017-01
Date Available
2017-02-20T12:22:46Z
Abstract
We document how export quantities and prices evolve after entry to a market. Controlling for marginal cost, and taking account of selection on idiosyncratic demand, there are economically and statistically significant dynamics of quantities, but no dynamics of prices. To match these facts, we estimate a model where firms invest in customer base through non-price actions (e.g. marketing and advertising), and learn gradually about their idiosyncratic demand. The model matches quantity, price and exit moments. Parameter estimates imply costs of adjusting investment in customer base, and slow learning about demand, both of which generate sluggish responses of sales to shocks.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Start Page
1
End Page
42
Series
UCD Centre for Economic Research Working Paper Series
WP2017/02
Copyright (Published Version)
2017 the authors
Classification
F1
L11
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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