TY - JOUR

T1 - Superstar exporters

T2 - An empirical investigation of strategic interactions in Danish export markets

AU - Ciliberto, Federico

AU - Jäkel, Ina C.

PY - 2021/3

Y1 - 2021/3

N2 - 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.

AB - 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.

KW - Export participation

KW - Multiple equilibria

KW - Strategic interaction

KW - Trade policy

UR - http://www.scopus.com/inward/record.url?scp=85098559521&partnerID=8YFLogxK

U2 - 10.1016/j.jinteco.2020.103405

DO - 10.1016/j.jinteco.2020.103405

M3 - Journal article

AN - SCOPUS:85098559521

VL - 129

JO - Journal of International Economics

JF - Journal of International Economics

SN - 0022-1996

M1 - 103405

ER -