Language:
English
In:
The Economic journal (London), 2012-12-01, Vol.122 (565), p.1206-1243
Description:
We find a robust negative correlation between Italian firms' productivity and their export share to low-income destinations. To account for this surprising fact, we marry Verhoogen (2008) with Eaton et al. (2011), by introducing firm heterogeneity in product quality and country heterogeneity in quality consumption in a framework featuring firm and market-specific shocks in entry costs and demand, and estimate the model's parameters structurally by the simulated method of moments. The estimated preference for quality turns out to be monotonically increasing in foreign destinations' income. The model also predicts a negative correlation between firms' R&D intensity and their export share to low-income destinations, a finding supported by our data. Overall, our results strongly suggest high-quality firms should concentrate their sales in high-income markets.
Subject(s):
Productivity ; International trade ; Trade ; Cost of entry ; Revenue ; Standard error ; Exporters ; Modeling ; Exports ; Fixed costs
ISSN:
0013-0133
E-ISSN:
1468-0297
DOI:
10.1111/j.1468-0297.2012.02529.x
Source:
JSTOR Arts & Sciences I
Source:
Business Source Ultimate
Source:
EconLit with Full Text
Source:
Oxford Journals A-Z Collection
Source:
Alma/SFX Local Collection
Source:
EBSCOhost EJS
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