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The Rewards of Self-Discovery: Learning and Firm Exporter Dynamics

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  • Cebreros Alfonso

Abstract

I develop and estimate a model of export dynamics featuring self-discovery that accounts well for new exporter dynamics:(a) continuation rates that are increasing with tenure, and (b) growth rates of export sales that are decreasing with tenure. The option value generated by the acquisition of more information is key to understanding firm dynamics as the discovery stage lasts as long as this option value is positive. I use the model to study the impact of export promotion policies that temporarily subsidize the fixed costs of exporting. These policies can result in long-lived increases in aggregate trade, but their effectiveness crucially depends on the speed of learning.

Suggested Citation

  • Cebreros Alfonso, 2016. "The Rewards of Self-Discovery: Learning and Firm Exporter Dynamics," Working Papers 2016-08, Banco de México.
    • Handle: RePEc:bdm:wpaper:2016-08
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    More about this item

    Keywords

    Learning; Uncertainty; Firm dynamics; Dynamic export supply; Option value;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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