Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236661 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9119
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
How do exporters expand their product scope and geographical presence? We argue that new exporters are uncertain about their profitability in different countries and products, but learn it as they start to export. As a consequence, exporters add products and countries sequentially, in an interdependent process. Exploiting disaggregated data on French exporters, we find empirical support consistent with such a mechanism, where firms learn from their initial export experiences and then adjust their sales, number of products and destination countries accordingly. Our results indicate that part of the learning is firm-specific, and not merely product- or market-specific. Furthermore, we find that firms tend to expand in the sub-extensive margin first by widening product scope within a destination and later by entering new destinations; and that firms’ core products are particularly resilient despite being used to “test the waters” when entering additional countries.
Subjects: 
export dynamics
experimentation
uncertainty
multiproduct firms
market interdependence
JEL: 
F10
F14
D22
L25
Document Type: 
Working Paper
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