CEPII, Recherche et Expertise sur l'economie mondiale
Hierarchy of Trade and Sequential Exporting


Vincent Boitier
Antoine Vatan

 Highlights :
  • We link the hierarchy of trade in terms of destinations to the age of firms.
  • We find that firms tend to Melitz predictions with age.
  • We develop a simple model of export choice based on sequential exporting.
  • This model explains i) why homogeneous firms may export differently and ii) the convergence towards Melitz' prediction.

 Abstract :
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.

 Keywords : Export Choice | Dispersion in Strategies | Experience as Exporter | Sequential Exporting

 JEL : f1
CEPII Working Paper
N°2017-22, December 2017

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 Domaines d'expertise

Commerce & Mondialisation
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