Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/314516 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 17619
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We study how demand uncertainty affects risk-neutral firms' number of export destinations when uncertainty is resolved after firms choose their export destinations and output. We show that firms' ability to allocate their output across destinations in response to destination-specific shock realizations provides even risk-neutral firms an incentive to export. Without appealing to firm-country heterogeneity or increasing marginal cost, our framework can explain why firms export to some but not all ex-ante indistinguishable destinations. We also show how, for a given firm productivity, the optimal number of export destinations depends on the correlation of shocks across the home and foreign countries.
Subjects: 
international trade
demand uncertainty
risk-neutral firms
optimal number of export destinations
JEL: 
F12
F61
Document Type: 
Working Paper

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