Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/71716 
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Papers No. 7346
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
In new new international trade theory, whether firms export or not are determined by their productivity. These models assume that firms enter a market to find their productivity levels revealed to them as in a lottery. In this paper we propose an alternative way to model whether firms export or not, namely as a firm-level decision akin to an investment decision with a real option value. We show that endogenizing the export decision is consistent with patterns of productivity and exporting reported in the empirical literature.
Subjects: 
international new ventures
firm-level heterogeneity
start-ups
stochastic dynamic programming
trade
exports
productivity
real option theory
investment
firms
international entrepreneurship
JEL: 
D92
D81
L26
M13
Document Type: 
Working Paper

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