An anatomy of international trade: Evidence from French firms

Jonathan W. Eaton, Samuel Kortum, Francis Kramarz

Research output: Contribution to journalArticle

289 Citations (Scopus)

Abstract

We examine the sales of French manufacturing firms in 113 destinations, including France itself. Several regularities stand out: (i) the number of French firms selling to a market, relative to French market share, increases systematically with market size; (ii) sales distributions are similar across markets of very different size and extent of French participation; (iii) average sales in France rise systematically with selling to less popular markets and to more markets. We adopt a model of firm heterogeneity and export participation which we estimate to match moments of the French data using the method of simulated moments. The results imply that over half the variation across firms in market entry can be attributed to a single dimension of underlying firm heterogeneity: efficiency. Conditional on entry, underlying efficiency accounts for much less of the variation in sales in any given market. We use our results to simulate the effects of a 10 percent counterfactual decline in bilateral trade barriers on French firms. While total French sales rise by around $16 billion (U.S.), sales by the top decile of firms rise by nearly $23 billion (U.S.). Every lower decile experiences a drop in sales, due to selling less at home or exiting altogether.

Original languageEnglish (US)
Pages (from-to)1453-1498
Number of pages46
JournalEconometrica
Volume79
Issue number5
DOIs
StatePublished - Sep 1 2011

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International trade
France
Participation
Firm heterogeneity
Method of simulated moments
Destination
Market size
Manufacturing firms
Trade barriers
Regularity
Market share
Bilateral trade
Market entry

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

Eaton, Jonathan W. ; Kortum, Samuel ; Kramarz, Francis. / An anatomy of international trade : Evidence from French firms. In: Econometrica. 2011 ; Vol. 79, No. 5. pp. 1453-1498.
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An anatomy of international trade : Evidence from French firms. / Eaton, Jonathan W.; Kortum, Samuel; Kramarz, Francis.

In: Econometrica, Vol. 79, No. 5, 01.09.2011, p. 1453-1498.

Research output: Contribution to journalArticle

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