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Sunk costs of exporting and the role of experience in international trade

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  • Philipp Meinen

Abstract

This paper estimates the importance of destination-specific sunk costs of exporting and investigates the role of firms' previous experience in international trade for the decision to export to a market. While destination-specific sunk costs are important, firms' experience in international trade can help to overcome these costs more easily. In particular, import experience from a market is found to facilitate exporting to this country and export experience from other markets can increase the probability of exporting to a country. This latter effect turns out to be conditional on the characteristics and number of markets served by a firm.

Suggested Citation

  • Philipp Meinen, 2015. "Sunk costs of exporting and the role of experience in international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 335-367, February.
    • Handle: RePEc:cje:issued:v:48:y:2015:i:1:p:335-367
    DOI: 10.1111/caje.12127
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    Cited by:

    1. Bose, Udichibarna & Mallick, Sushanta & Tsoukas, Serafeim, 2020. "Does easing access to foreign financing matter for firm performance?," Journal of Corporate Finance, Elsevier, vol. 64(C).
    2. Amer, Estefania, 2023. "Internationalization, institutional pressures in foreign markets, and environmental sustainability," Journal of International Management, Elsevier, vol. 29(1).
    3. M. Padmaja & Subash Sasidharan, 2017. "Sunk Costs, Firm Heterogeneity, Export Market Entry and Exit: Evidence from India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(2), pages 367-393, June.
    4. Mau, Karsten, 2017. "US policy spillover(?) – China’s accession to the WTO and rising exports to the EU," European Economic Review, Elsevier, vol. 98(C), pages 169-188.
    5. Sugandha Huria & Kriti Sharma & Neha Jain & Ashley Jose, 2022. "Digitalization and Exports: A case of Indian Manufacturing MSMEs," Working Papers 2261, Indian Institute of Foreign Trade.
    6. Lee, Woori & Mulabdic, Alen & Ruta, Michele, 2023. "Third-country effects of regional trade agreements: A firm-level analysis," Journal of International Economics, Elsevier, vol. 140(C).
    7. Carmen Díaz-Mora & Rosario Gandoy & Belén González-Díaz, 2018. "Looking into global value chains: influence of foreign services on export performance," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(4), pages 785-814, November.
    8. Jeong, Jaehoon & Yang, Jae-Suk, 2023. "Why do some firms stop exporting?," International Business Review, Elsevier, vol. 32(4).
    9. Díaz-Mora, Carmen & Córcoles, David & Gandoy, Rosario, 2015. "Exit from exporting: Does being a two-way trader matter?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-27.
    10. Eliane Choquette, 2019. "Import-based market experience and firms’ exit from export markets," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(3), pages 423-449, April.
    11. Pushan Dutt & Ana Maria Santacreu & Daniel A. Traça, 2022. "The gravity of experience," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(1), pages 213-248, February.
    12. Leticia Blázquez & Carmen Díaz-Mora & Belén González-Díaz, 2020. "The role of services content for manufacturing competitiveness: A network analysis," PLOS ONE, Public Library of Science, vol. 15(1), pages 1-22, January.
    13. Per Botolf Maurseth & Hege Medin, 2017. "Market-specific Sunk Export Costs: The Impact of Learning and Spillovers," The World Economy, Wiley Blackwell, vol. 40(6), pages 1105-1127, June.
    14. Siewers, Samuel & Martínez-Zarzoso, Inmaculada & Baghdadi, Leila, 2024. "Global value chains and firms’ environmental performance," World Development, Elsevier, vol. 173(C).
    15. Stephen Esaku, 2022. "Which firms drive employment growth in Sub-Saharan Africa? Evidence from Kenya," Small Business Economics, Springer, vol. 59(1), pages 383-396, June.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General

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