abstract

To quantify trade frictions, we examine multiproduct exporters. We build a flexible general-equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market access cost shocks. Our 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. Market access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer nontariff barriers. We evaluate a counterfactual scenario that harmonizes market access costs across destinations and find global welfare gains similar to eliminating all current tariffs.

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

jel: D22, F12, F13, F14, O14, O19

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 and code on open icpsr [html] (09/30/2021)
    code is documented in, and directly executable through, master_script.m
  • converter sitc2isic [csv 13k] [stata9 51k]
    converter documentation [pdf 118k]
• data sources
  • exporter and product data SECEX (description by OECD)
  • formal employer and employee census RAIS (in portuguese)