Sunk costs of exporting and the role of experience in international trade |
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| Authors: | Philipp Meinen |
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| Affiliation: | Deutsche Bundesbank |
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| Abstract: | This paper estimates the importance of destination‐specific sunk costs of exporting and investigates the role of firms' previous experience in international trade for the decision to export to a market. While destination‐specific sunk costs are important, firms' experience in international trade can help to overcome these costs more easily. In particular, import experience from a market is found to facilitate exporting to this country and export experience from other markets can increase the probability of exporting to a country. This latter effect turns out to be conditional on the characteristics and number of markets served by a firm. |
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