A1 - Vincent Boitier
A1 - Antoine Vatan
TI - Hierarchy of Trade and Sequential Exporting
IS - 2017-22
T3 - Working Papers
KW - Export Choice
KW - Dispersion in Strategies
KW - Experience as Exporter
KW - Sequential Exporting
N2 - Export destination baskets of exporting firms do not seem to follow the hierarchy predicted by heterogeneous firms models. Existing literature reconciles theory and data by incorporating additional components of heterogeneity. We first show that we do not need these components to bridge the gap between data and theory. We highlight a strong correlation between the respect of hierarchy and the age of the firm. Without taking into account the age of firms, what we observe in the data is not a drawback but a snapshot of the convergence toward theory's prediction. Second, we develop a simple dynamic model that features this convergence. Our theoretical argument is based upon sequential exporting (choosing one destination at a time) and upon a baseline trade-off between attractiveness and competition.
ER -