Department of Economics and Business Economics

Superstar exporters: An empirical investigation of strategic interactions in Danish export markets

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  • Federico Ciliberto, University of Virginia, Centre for Economic Policy Research, London, DIW Berlin
  • ,
  • Ina C. Jäkel

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 53.2 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 a factor of two; and, (ii) overstating the probability that firms would stop exporting to a market if tariffs were imposed by a factor of more than five.

Original languageEnglish
Article number103405
JournalJournal of International Economics
Volume129
Number of pages22
ISSN0022-1996
DOIs
Publication statusPublished - Mar 2021

    Research areas

  • Export participation, Multiple equilibria, Strategic interaction, Trade policy

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