Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/283096 
Year of Publication: 
2023
Series/Report no.: 
JRC Working Papers in Economics and Finance No. 2023/7
Publisher: 
European Commission, Ispra
Abstract: 
We empirically investigate whether firms lower information frictions in foreign sourcing through prior exporting. Using a panel of Slovenian manufacturing firms in the period 1996-2011, we estimate the probability of import entry in a new market when the firm is already exporting to the same country and we find a positive and significant relation. To control for the endogeneity of the export decision, we implement an instrumental variable approach exploiting the notion of sequential exporting. Moreover, we rule out productivity growth as being the only predictor of entry in a foreign market through several falsification tests. These findings suggest information frictions play an important role for firms trading in international markets.
Subjects: 
Sourcing
Import entry
Information Frictions
Sunk costs
JEL: 
F14
L20
D22
D83
Creative Commons License: 
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Document Type: 
Working Paper

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