Sequential Product Exporting

How do firms start exporting new products to new markets? In this paper we develop a model of export dynamics with multiproduct firms, where firms are ex ante uncertain about their profitability in different markets and with different products. Exporters learn from their initial export experiences and gradually adjust their sales, number of products and destination countries. Using disaggregated data on French exporters, we find empirical support for our predictions on (export) age-dependent growth, entry and exit. In particular, we find evidence of firms learning within a destination country across different products. Our model also helps rationalize empirical evidence of positive trade policy spillovers (which contrasts with conventional trade diversion effects). We use our framework to show empirically that tariff reductions after the Uruguay Round led to entry in unaffected countries and products. This finding has important implications for our understanding of trade agreements and their design.

work with F Albornoz, H Calvo and E Ornelas