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Licensed Unlicensed Requires Authentication Published by De Gruyter May 1, 2008

Trade Liberalization and New Exporters' Size: A Test of Heterogeneous Firm Models

  • Rosen Marinov , Nadia Rocha and Virginia DiNino

Abstract

This paper tests an empirical implication of heterogeneous firm models along the lines of Melitz (2003) in the context of falling trade costs. Using the EU's intensive liberalization phase (1993-2002) as a natural experiment, we investigate freer trade's impact on the frequency of market reorientation across the productivity distribution of active firms to shed light on the presence of a minimum productivity (size) threshold for profitable sales abroad. Contrary to the models' predictions, firms that switch from non-exporting to exporting over the studied period are not concentrated in a particular size range. Our findings, based on a rich data set of French manufacturing enterprises, suggest a scope for fine-tuning of the theoretical framework.

Published Online: 2008-5-1

©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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