How Do Multiproduct Exporters React to a Change in Trade Costs?

EFIGE Working Paper No. 2009-16

32 Pages Posted: 15 Feb 2012

See all articles by Antoine Berthou

Antoine Berthou

Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques; Paris School of Economics (PSE)

Lionel Fontagne

University of Paris 1 Panthéon Sorbonne; Paris School of Economics; CEPII

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Date Written: October 12, 2009

Abstract

Recent literature has highlighted the major contribution of multi-product firms to international trade activity. Such firms ship several product categories to foreign destinations each time they export. Our objective is to document the contribution of product selection to the reaction of firms further to a change in trade costs. For this, we make use of French firm-level export data, combined with a survey detailing exporters' characteristics. We first show that distance has a negative effect on all dimensions of firms' exports: the export decision, the number of products exported and the average value of exports by product. This contrasts with estimations using annual shipments at the country level, where distance is found to have no effect on the intensive margin. We then use the euro adoption in 1999 as a natural experiment to explore the effects of a change in trade costs over time. We find that, following this change, only the most productive firms increased the number of products that they export to eurozone destinations. No effect is found on the decision to export and the value of exports by product. Where monetary policy coordination preceded, some of the least productive firms stopped exporting or concentrated their exports over a smaller range of product categories, consistent with a tougher competitive environment on eurozone markets after 1999. Overall, our results show that firms' adjustments are made overwhelmingly through changes in the number of products exported.

Keywords: trade, firms' heterogeneity, multi-product firms, euro

JEL Classification: F12, F15

Suggested Citation

Berthou, Antoine and Fontagne, Lionel, How Do Multiproduct Exporters React to a Change in Trade Costs? (October 12, 2009). EFIGE Working Paper No. 2009-16, Available at SSRN: https://ssrn.com/abstract=2004982 or http://dx.doi.org/10.2139/ssrn.2004982

Antoine Berthou

Université Paris I Panthéon-Sorbonne - Centre Maison des Sciences Economiques ( email )

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Paris School of Economics (PSE) ( email )

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Lionel Fontagne (Contact Author)

University of Paris 1 Panthéon Sorbonne ( email )

Maison des Sciences Economiques
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Paris, 75013
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Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France
+33 1 44 07 89 94 (Phone)

HOME PAGE: http://lionelfontagne.weebly.com/

CEPII ( email )

9 Rue Georges Pitard
Paris, 75015
France
+33 1 53 68 55 06 (Phone)

HOME PAGE: http://lionelfontagne.weebly.com/

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