Learning, Incomplete Contracts and Export Dynamics: Theory and Evidence from French Firms

67 Pages Posted: 30 Nov 2012

See all articles by Romain Aeberhardt

Romain Aeberhardt

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Ines Buono

Bank of Italy

Harald Fadinger

University of Vienna

Date Written: October 26, 2012

Abstract

Using French firm-level trade data, we provide empirical support for a heterogeneous firm model in which exporting requires finding a local partner in each market: contracts are incomplete, exporters must learn the reliability of their partners through experience, and export behaviour is state-dependent due to matching frictions. As predicted by our theoretical model, we find that better legal institutions ease contracting frictions especially in sectors with serious contracting problems. This increases state dependence by more in those sectors. Finally, hazard rates depend on the quality of local legal institutions and decline with the age of the relationship, as unreliable partners are weeded out.

Keywords: trade dynamics, learning, institutions, state dependence, firm-level trade data

JEL Classification: F12, F14, L14

Suggested Citation

Aeberhardt, Romain and Buono, Ines and Fadinger, Harald, Learning, Incomplete Contracts and Export Dynamics: Theory and Evidence from French Firms (October 26, 2012). Bank of Italy Temi di Discussione (Working Paper) No. 883, Available at SSRN: https://ssrn.com/abstract=2182574 or http://dx.doi.org/10.2139/ssrn.2182574

Romain Aeberhardt

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

HOME PAGE: http://www.crest.fr/pageperso/romain.aeberhardt/romain.aeberhardt.htm

Ines Buono (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Harald Fadinger

University of Vienna ( email )

Bruenner Strasse 72
Vienna, Vienna 1090
Austria

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