abstract

We examine three-dimensional panel data for Brazilian and Chilean exporters, their products and destinations. The data show that (i) the distribution of the exporters' number of goods (the exporter scope) is robust within destinations and approximately Pareto, (ii) exporter scope is positively associated with average sales per good within destinations but not across, and (iii) exports are concentrated in few top-selling goods by firm. We present a heterogeneous-firm model with product choice that implies these regularities and retains key predictions of previous trade models. At the country level, the model generates bilateral trade flows consistent with gravity-equation evidence. Across firms, the model explains regularities with convex product-entry costs that increase more than proportionally in scope on the distribution side. Within firms, variable product-entry costs, convex in scope, lead firms to concentrate sales in few goods.

keywords: International trade; heterogeneous firms; multi-product firms; firm and product panel data; Brazil

jel: F12, L11, F14

background

• supporting files
  • additional tables and graphs [pdf 5.39M]
• data sources
  • exporter and product data SECEX (description by OECD)
  • formal employment and firm census RAIS (in portuguese)