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Variable Trade Costs, Composition Effects, and the Intensive Margin of Trade

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  • Lionel Fontagné
  • Antoine Berthou

Abstract

We estimate the elasticity of extra-EU French firm-level exports with respect to applied tariffs -- a variable trade cost. We propose a methodology controlling for unobserved firm characteristics driving selection in exports market and for the resistance terms. Results confirm a significant negative impact of tariffs on firm-level exports, with one fifth of this impact falling on the induced adjustment in the exporters' product mix. When controlling for this adjustment and focusing on the core exported products, the elasticity of the product-destination firm-level exports with respect to applied tariffs is estimated at about -2.5.

Suggested Citation

  • Lionel Fontagné & Antoine Berthou, 2015. "Variable Trade Costs, Composition Effects, and the Intensive Margin of Trade," Working Papers 2015-08, CEPII research center.
    • Handle: RePEc:cii:cepidt:2015-08
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    References listed on IDEAS

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    More about this item

    Keywords

    international trade; firm heterogeneity; multi-product exporters; trade elasticity;
    All these keywords.

    JEL classification:

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

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