Department of Economics and Business Economics

Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets

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In many countries, exports are highly concentrated among a few "superstar" firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 54.3 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: (i) overstating the probability that firms would start exporting to a market following tariff elimination by 8 percentage points; and, (ii) overstating the probability that firms would stop exporting to a market if tariffs were imposed by 7.5 percentage points. We also show that competitive effects vary across export markets and competitors. This heterogeneity in the competitive effects implies that there exist multiple equilibria, both in the identity and in the number of firms.
Original languageEnglish
Place of PublicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages53
StatePublished - 18 Sep 2017
SeriesEconomics Working Papers
Number2017-09

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