Survival in export markets
Date
2014-08
Authors
Albornoz, Facundo
Fanelli, Sebastián
Hallak, Juan Carlos
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Journal Title
Journal ISSN
Volume Title
Publisher
Universidad de San Andrés. Departamento de Economía
Abstract
This paper explores the determinants of rm survival in export markets. Our theoretical framework
includes a geometric Brownian motion for rm pro tability, market-speci c sunk and xed exporting costs
that are common across rms, and rm- and market-speci c pro tability shifters that are constant over
time. We derive the probability of survival upon entry in an export market. We show that this probability
increases with the ratio of sunk to xed costs and is insensitive to the pro tability shifters. Also, we show
that the survival probability is una ected by xed costs if sunk costs are zero. Combining our theoretical
results with observed patterns of survival among Argentine exporters, we infer the impact of distance and
experience on the magnitude of sunk and xed costs. In our data set, survival rates upon entry decrease
with distance and increase with experience. Hence, we infer that xed costs increase more with distance
than sunk cost while xed costs fall with experience su ciently strongly to dominate the fall in sunk costs.
These results carry implications on parametrizations of theoretical models of export dynamics and serve as
a benchmark to assess structural estimates of xed and sunk costs.
Description
Fil: Albornoz, Facundo. Universidad de San Andrés. Departamento de Economía; Argentina.
Fil: Fanelli, Sebastián. Universidad de San Andrés. Departamento de Economía; Argentina.
Fil: Hallak, Juan Carlos. Universidad de San Andrés. Departamento de Economía; Argentina.
Fil: Fanelli, Sebastián. Universidad de San Andrés. Departamento de Economía; Argentina.
Fil: Hallak, Juan Carlos. Universidad de San Andrés. Departamento de Economía; Argentina.