Firms in International Trade

32 Pages Posted: 21 May 2008

See all articles by Andrew B. Bernard

Andrew B. Bernard

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

J. Bradford Jensen

Georgetown University - McDonough School of Business; Peterson Institute for International Economics

Stephen J. Redding

Princeton University

Peter K. Schott

Yale University - School of Management; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Multiple version iconThere are 3 versions of this paper

Date Written: April 2007

Abstract

Despite the fact that importing and exporting are extremely rare firm activities, economists generally devote little attention to the role of firms when discussing international trade. This paper summarizes key differences between trading and non-trading firms, demonstrates how these differences present a challenge to standard trade models and shows how recent 'heterogeneous-firm' models of international trade address these challenges. We then make use of transaction-level U.S. trade data to introduce a number of new stylized facts about firms and trade. These facts reveal that the extensive margins of trade - that is, the number of products firms trade as well as the number of countries with which they trade - are central to understanding the well-known role of distance in dampening aggregate trade flows.

Keywords: Heterogeneous firms, international trade, new trade theory, old trade theory

JEL Classification: F10, F11, F12

Suggested Citation

Bernard, Andrew B. and Jensen, J. Bradford and Redding, Stephen J. and Schott, Peter K., Firms in International Trade (April 2007). CEPR Discussion Paper No. DP6277, Available at SSRN: https://ssrn.com/abstract=1135515

Andrew B. Bernard (Contact Author)

Dartmouth College - Tuck School of Business ( email )

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HOME PAGE: http://mba.tuck.dartmouth.edu/pages/faculty/Andrew.Bernard/

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR) ( email )

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J. Bradford Jensen

Georgetown University - McDonough School of Business ( email )

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Peterson Institute for International Economics ( email )

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Stephen J. Redding

Princeton University ( email )

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HOME PAGE: http://www.princeton.edu/~reddings/

Peter K. Schott

Yale University - School of Management ( email )

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203-436-4260 (Phone)
203-436-6974 (Fax)

HOME PAGE: http://www.som.yale.edu/faculty/pks4

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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