Abstract
We develop a novel methodology for disentangling the demand and cost drivers of firm heterogeneity. Our specific focus is on export status differences, and we utilize a new data set containing firm-product information on prices and quantities sold in the domestic and each export market. Our methodology allows us to jointly estimate firm-level productivity and markups in every market while imposing no functional form restrictions on demand. We find that i) exporters have thicker domestic markets than non-exporters; ii) this advantage translates to foreign markets; and iii) while all firms face a trade-off between lowering costs and enhancing demands, export firms achieve demand increases with much less loss in productivity.
Original language | American English |
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Pages (from-to) | 1-70 |
Number of pages | 70 |
Journal | Working Paper |
State | Published - 2018 |
Keywords
- Amil Petrin
- Daniel Trefler
- Demand
- Exporting
- F12
- L11 * We thank Dan Ackerberg
- Markups
- Productivity JEL codes: F10
- Victor Aguirregabiria
- and Frederic Warzynski for help-ful comments