How to combine high sunk costs of exporting and low export survival

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn endeavouring to explain the empirical puzzle that the sunk costs of exporting are important, but that, at the same time, trade flows do not, on average, survive for very long, this paper explores the concepts of core and peripheral markets. First, it illustrates that if the importance of sunk costs as well as the expected future returns from exporting are different, depending on whether the export decision refers to a core or a peripheral market, it is plausible that while firms will tend to stay on the core market for a long time, they will enter and exit the peripheral market much more frequently. Second, using firm-product-destination-specific export data for all firms in the Swedish food chain for the period 1997-2007, an empirical test is carried out to ascertain whether there is support for the hypothesis that trade duration will be longer for core markets. Employing two variables that capture different aspects of the core/periphery dimension, it is found that firms will indeed tend to stay longer in their core markets, while export decisions regarding peripheral markets are much less long-term. The conclusion, therefore, is that the empirical puzzle can be explained by taking into account the fact that the trade hysteresis literature builds on data on the core market decision to export or not, and that the trade survival literature also includes data on decisions to stay in or exit peripheral markets. JEL classification: F10; F14

Export Experience, Product Differentiation and Firm Survival in Export Markets

“…Although there have recently been a number of studies focusing on firm‐level characteristics in explaining export duration (e.g. Békés and Muraközy, ; Esteve‐Pérez et al, ; Gullstrand and Persson, ), such firm‐level empirical evidence is still comparatively scarce. This means that our knowledge on firm‐level trade patterns (in particular temporary or “on–off” exporting by firms) is still limited and that it is not sufficiently clear what kind of firms become “always exporters”.…”

Gravity Models and Asymmetric Exchange Rate Effects: Insights from German Beer Exports

“…Hence, the marketing bottleneck hypothesis seems to be a more relevant reason for PTM to occur when all the trading partners are considered. Both results are plausible, because exporters tend to distinguish between core and periphery markets (Schmid & Luber, ; Gullstrand & Persson, ). In a large pooled sample, effects of PTM in a few major markets might be blurred due to inclusion of destinations for which appreciations are passed through, whereas depreciations are not.…”

Export Behavior of the Turkish Manufacturing Firms

“…In the previous section, strong evidences about the presence of sunk- An explanation for the contrary empirical findings to the theoretical implications has been proposed by Gullstrand and Persson (2012). By exploring core and peripheral markets with different sunk-costs, they…”