Department of Economics and Business Economics

Explaining the size differences of exporter premia: theory and evidence

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Two decades of research have established pronounced exporter productivity premia (EPP) and exporter size premia (ESP). Yet, we do not know why such exporter premia differ so widely in magnitude across countries or sectors? We take this question to the theory and to the data. We derive the sectoral EPP and ESP in a standard heterogeneous firms trade model and apply the insights from the model to guide our empirical investigation of detailed Danish firm-level data. We show that a significant share of the observed variation in EPP and ESP across sectors can be accounted for by sector differences in the underlying variation in productivity dispersion, variable trade costs, the ratio of fixed export costs to fixed costs of production, and the elasticity of demand.

Original languageEnglish
JournalReview of World Economics
Pages (from-to)327-351
Number of pages25
Publication statusPublished - May 2017

    Research areas

  • Intra-industry trade, Exporter productivity, Exporter size premium, Firm-level data, Heterogeneous firms, INTERNATIONAL-TRADE, PRODUCTIVITY PREMIUM, HETEROGENEOUS FIRMS, PERFORMANCE

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