Arbeitspapier
Market size and entry in international trade: Product versus firm fixed costs
This paper develops a theoretical framework to infer the nature of fixed costs from the relationship between entry patterns in international markets and destination market size. If fixed costs are at the firm level, firms take advantage of an intrafirm spillover by expanding firm-level product range (scope). Few firms enter with many products and dominate international trade. If fixed costs are at the product level, an interfirm spillover reduces the fixed costs to export for all firms producing the product. Using cross-country data on firm and product, I find empirical evidence consistent with product-level costs. More firms than products enter in larger markets, offering their consumers lower prices and a greater variety of goods within the product category.
- Language
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Englisch
- Bibliographic citation
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Series: Bank of Canada Staff Working Paper ; No. 2018-43
- Classification
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Wirtschaft
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Empirical Studies of Trade
Multinational Firms; International Business
- Subject
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Firm dynamics
International topics
Trade integration
- Event
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Geistige Schöpfung
- (who)
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Steingress, Walter
- Event
-
Veröffentlichung
- (who)
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Bank of Canada
- (where)
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Ottawa
- (when)
-
2018
- DOI
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doi:10.34989/swp-2018-43
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Steingress, Walter
- Bank of Canada
Time of origin
- 2018
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