Big is Beautiful When Exporting

14 Pages Posted: 5 Apr 2016

See all articles by Rikard Forslid

Rikard Forslid

Stockholm University; Centre for Economic Policy Research (CEPR)

Toshihiro Okubo

Keio University

Date Written: May 2016

Abstract

This paper starts out from the observation that the export ratios of firms (export to sales ratios) vary greatly among firms and that they are systematically higher for larger exporters. We relate the difference in export ratios to firm‐level differences in transport costs. In accordance with the data, we assume that freight rates are a function of firm‐level export volumes. We test our model using Japanese manufacturing firm‐level data. We first estimate the elasticity of the freight rate with respect to firm‐level export volumes at the sector level. When feeding these estimates back into the model, it can explain more than 50% of the variation in firm‐level export ratios.

Suggested Citation

Forslid, Rikard and Okubo, Toshihiro, Big is Beautiful When Exporting (May 2016). Review of International Economics, Vol. 24, Issue 2, pp. 330-343, 2016. Available at SSRN: https://ssrn.com/abstract=2759084 or http://dx.doi.org/10.1111/roie.12215

Rikard Forslid (Contact Author)

Stockholm University ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden
+46 8 16 3096 (Phone)
+46 8 15 9482 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Toshihiro Okubo

Keio University ( email )

2-15-45 Mita
Minato-ku
Tokyo, 108-8345
Japan

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