Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets

80 Pages Posted: 18 Sep 2017 Last revised: 31 Aug 2020

See all articles by Federico Ciliberto

Federico Ciliberto

University of Virginia - Department of Economics; Centre for Economic Policy Research (CEPR)

Ina Charlotte Jäkel

Aarhus University

Multiple version iconThere are 2 versions of this paper

Date Written: August 29, 2020

Abstract

In many countries, exports are highly concentrated among a few "superstar"' firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 53.2 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: \emph{(i)} overstating the probability that firms would start exporting to a market following tariff elimination by a factor of two; and, \emph{(ii)} overstating the probability that firms would stop exporting to a market if tariffs were imposed by a factor of more than five.

Keywords: Export participation, Strategic Interaction, Multiple Equilibria, Trade policy

JEL Classification: F12, F14, L13

Suggested Citation

Ciliberto, Federico and Jäkel, Ina Charlotte, Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets (August 29, 2020). Available at SSRN: https://ssrn.com/abstract=3037145 or http://dx.doi.org/10.2139/ssrn.3037145

Federico Ciliberto (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Ina Charlotte Jäkel

Aarhus University ( email )

Nordre Ringgade 1
Aarhus, 8000
Denmark

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