Entry on Export Markets and Firm-Level Performance Growth: Intra-Industrial Convergence or Divergence?

33 Pages Posted: 9 Jan 2011 Last revised: 22 Jul 2011

See all articles by Florian Mayneris

Florian Mayneris

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: January 7, 2011

Abstract

This paper investigates theoretically and empirically the endogenous investment decision of firms conditioning on export decision. It shows that theoretically, whatever the form of preferences, firms that start exporting invest more and grow more than the others. However, it is shown that when preferences are CES, within each category of firms (domestic and switchers), initial productivity and investment are strategic complements, inducing intra-industrial divergence. On the contrary, when preferences are quadratic, initial productivity and investment are strategic substitutes: less productive firms invest more and grow more than the others, inducing intra-industrial convergence. Empirical results on French data support the predictions of the quadratic preferences model.

Keywords: Export Decision, Investment, Firm Heterogeneity

JEL Classification: D21, D24, F12

Suggested Citation

Mayneris, Florian, Entry on Export Markets and Firm-Level Performance Growth: Intra-Industrial Convergence or Divergence? (January 7, 2011). FEEM Working Paper No. 153.2010, Available at SSRN: https://ssrn.com/abstract=1736463 or http://dx.doi.org/10.2139/ssrn.1736463

Florian Mayneris (Contact Author)

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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