Entry Costs and Increasing Trade
December 2011
Working Paper Number:
CES-11-38R
Abstract
Using confidential microdata from the US Census, we find that the fraction of manufacturing plants that export rose from 21% in 1987 to 39% in 2006. It has been suggested that similar trends in other countries may have been caused by declining costs of entering foreign markets. Our study tests this hypothesis for the first time. Both reduced form and structural estimation approaches find little evidence that entry costs declined significantly for US firms over this period. Despite the large literature on changes in variable costs to trade such as tariffs, our estimations represent the first analysis of how the costs of entering foreign markets have changed over time.
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estimating,
demand,
market,
estimation,
sale,
manufacturing,
cost,
export,
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exporting,
exporter,
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industries estimate,
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Department of Commerce,
Annual Survey of Manufactures,
National Bureau of Economic Research,
Federal Reserve Bank,
Federal Reserve System,
World Bank,
Census of Manufacturing Firms,
United States Census Bureau
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