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Second Thoughts on Exporter Productivity

Author

Listed:
  • Philipp J.H. Schröeder

    (Aarhus School of Business, University of Aarhus, Denmark)

  • Allan Sørensen

    (School of Economics and Management, University of Aarhus, Denmark)

Abstract

Empirical literature has established a positive link between firm productivity and export status, yet notable exceptions exist. The present paper shows that the underlying theory (Melitz, 2003) is in fact able to accommodate the rule as well as the exception. The fulcrum of the argument is the tension between empirical work measuring productivity based on average cost information, and theoretical work representing productivity by marginal cost. In a heterogeneous firms trade model, we compute productivity based on average cost and find that around the export-indifferent firm, exporters will be less productive than non-exporters. Furthermore, we show that this effect may feed through at the industry level.

Suggested Citation

  • Philipp J.H. Schröeder & Allan Sørensen, 2009. "Second Thoughts on Exporter Productivity," Economics Working Papers 2009-03, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2009-03
    as

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    File URL: https://repec.econ.au.dk/repec/afn/wp/09/wp09_03.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Intra-industry trade; firm productivity; monopolistic competition; heterogeneous firms;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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