Explaining the size differences of exporter premia: theory and evidence

Ingo Geishecker; Philipp J. H. Schroeder; Allan Sorensen

doi:10.1007/s10290-016-0266-9

Explaining the size differences of exporter premia: theory and evidence

Ingo Geishecker^*, Philipp J. H. Schroeder, Allan Sorensen

^*Corresponding author for this work

Department of Economics and Business Economics - The Tuborg Research Centre

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaper › Journal article › Research › peer-review

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Abstract

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 language	English
Journal	Review of World Economics
Volume	153
Issue	2
Pages (from-to)	327-351
Number of pages	25
ISSN	1610-2878
DOIs	https://doi.org/10.1007/s10290-016-0266-9
Publication status	Published - May 2017

Keywords

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

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title = "Explaining the size differences of exporter premia: theory and evidence",

abstract = "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.",

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N2 - 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.

AB - 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.

KW - Intra-industry trade

KW - Exporter productivity

KW - Exporter size premium

KW - Firm-level data

KW - Heterogeneous firms

KW - INTERNATIONAL-TRADE

KW - PRODUCTIVITY PREMIUM

KW - HETEROGENEOUS FIRMS

KW - PERFORMANCE

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DO - 10.1007/s10290-016-0266-9

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SP - 327

EP - 351

JO - Review of World Economics

JF - Review of World Economics

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ER -

Explaining the size differences of exporter premia: theory and evidence

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