Variable Trade Costs, Composition Effects, and the Intensive Margin of Trade

29 Pages Posted: 24 Mar 2015

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: March 2015

Abstract

We estimate the elasticity of extra-EU French firm-level exports with respect to applied tariffs, a variable trade cost. We propose a methodology controlling for unobserved firm characteristics driving selection in exports market and for the usual resistance terms. Results confirm a significant negative impact of tariffs on firm-level exports, with one fifth of this impact falling on the induced adjustment in the exporters' product mix. When controlling for this adjustment and focusing on the core exported products, the elasticity of the product-destination firm-level exports with respect to applied tariffs is estimated at about -2.5.

Keywords: International trade, firm heterogeneity, multi-product exporters, trade elasticity

JEL Classification: F12, F15

Suggested Citation

Berthou, Antoine and Fontagne, Lionel, Variable Trade Costs, Composition Effects, and the Intensive Margin of Trade (March 2015). Banque de France Working Paper No. 543, Available at SSRN: https://ssrn.com/abstract=2584393 or http://dx.doi.org/10.2139/ssrn.2584393

Antoine Berthou (Contact Author)

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

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Lionel Fontagne

University of Paris 1 Panthéon Sorbonne ( email )

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Paris School of Economics ( email )

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