Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets
80 Pages Posted: 18 Sep 2017 Last revised: 31 Aug 2020
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Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets
Superstar Exporters: An Empirical Investigation of Strategic Interactions in Danish Export Markets
Date Written: August 29, 2020
Abstract
In many countries, exports are highly concentrated among a few "superstar"' firms. We estimate the export decisions of superstar firms as the result of a complete information, simultaneous, discrete choice, static entry game. We employ a dataset on the universe of Danish trade transactions by firm, product and destination. We also obtain detailed information on applied, preferential tariff protection from the MAcMap-HS6 database. We find evidence of strong negative competitive effects of entry: in the absence of strategic competitive effects, firms would be 53.2 percentage points more likely to export to a given market. Next, we run two counterfactual exercises. We show that failing to account for the strategic interaction among superstar exporters leads to: \emph{(i)} overstating the probability that firms would start exporting to a market following tariff elimination by a factor of two; and, \emph{(ii)} overstating the probability that firms would stop exporting to a market if tariffs were imposed by a factor of more than five.
Keywords: Export participation, Strategic Interaction, Multiple Equilibria, Trade policy
JEL Classification: F12, F14, L13
Suggested Citation: Suggested Citation