Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185725 
Year of Publication: 
2017
Series/Report no.: 
Discussion Paper No. 55
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
This paper studies the life-cycle dynamics of exporters and multinational enterprises (MNEs). We present a dynamic model of trade and MNE activity in which the mode of serving a market depends on the well-known proximity-concentration tradeoff. We show that the option of performing MNE activities in the model produces life-cycle patterns for exporters that differ from those in an export-only model. Calibrating our model to rich firm-level data from France and Norway, our main quantitative finding is that a reduction in trade costs triggers much larger responses in growth rates and exit rates, for young exporters, in the model with MNEs than in the model without MNEs. We also show that the model is largely consistent with a set of new facts on the joint life-cycle dynamic behavior of exporters and MNEs.
Subjects: 
international trade
exporters
multinational firm
markov process
sunk cost
proximity-concentration tradeoff
trade liberalization
JEL: 
F01
F02
Document Type: 
Working Paper

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