The Extensive Margin of Exporting Products: A Firm-level Analysis

Costas Arkolakis, Sharat Ganapati, Marc-Andreas Muendler

Current draft: Jan 14, 2019
First draft: Nov 13, 2007

University of California, San Diego


abstract

We examine multi-product exporters to quantify the benefits of product scope expansions under market-access barriers. We develop a general-equilibrium model of multi-product firms that generalizes earlier models and offers flexibility for estimation. To understand market-access costs we study the product sales profiles within firms and across destinations. We document a set of facts using Brazilian firm-product-destination data and adopt a simulated method of moments estimator under rich demand and market-access cost shocks consistent with those facts. The estimates show that additional products farther from a firm's core competency come at higher production costs, but there are substantive economies of scope in market-access costs. The market-access costs differ across destinations, falling more rapidly in nearby regions and at destinations with fewer non-tariff barriers. We evaluate a counterfactual scenario that reduces differential market-access costs to their observed minima and find welfare gains similar to eliminating all current tariffs.

keywords: International trade; heterogeneous firms; multi-product firms; firm and product panel data; Brazil

jel: F12, L11, F14


background

  • online supplement [pdf 402k]
  • nber working paper [16641] version
  • companion paper with cross-country evidence: CESifo Economic Studies 2013, 59(2): 223-248 [doi html]
  • companion paper in continuous product space with generalizations [pdf 194k]
  • replication code
    • data preparation and reduced-form estimation in stata [zip 322k] (12/18/2015)
      code is documented in, and directly executable through, executable %OrderOfPrograms.do
    • estimation and simulation in matlab 5 [zip 220k] (9/3/2014)
      code is documented in, and directly executable through, master_script.m
    • converter sitc2isic [csv 13k] [stata9 51k]
      converter documentation [pdf 118k]
  • data sources
    • previous data documentation (additional tables and graphs) [pdf 5.8M]
    • exporter and product data SECEX (description by OECD)
    • formal employer and employee census RAIS (in portuguese)