abstract

We use a panel of Brazilian exporters, their products, and destination markets to document a set of regularities for multi-product exporters. Our data reveal that multi-product firms systematically export their top products across multiple destinations but their lowest-selling products ship in smaller amounts than the lowest-selling products of small exporters. To account for these regularities, we develop a model of firm-product heterogeneity with local entry costs that depend on exporter scope (the number of a firm's products in a market). Estimating this model for the within-firm sales distribution we find that firms face a strong decline in product sales with scope but also that market-specific entry costs drop fast. Counterfactual experiments with globally falling entry costs indicate that a large share of the simulated increase in trade is attributable to declines in the firm's entry cost for the first product.

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

jel: F12, L11, F14

background

• companion paper (continuous product space with generalizations) [pdf 194k]
• nber working paper [16641] version
• supporting files
  • online data appendix (additional tables and graphs) [pdf 5.8M]
  • online technical appendix (nested demand system with different elasticities) [pdf 121k]
• replication code
  • estimation in stata 9.2 [zip 303k] (8/3/2011)
    code is documented in, and directly executable through, master program %OrderOfPrograms.do
  • predictions in matlab 5 [m 9k] (previous version 11/30/2010)
  • simulations in matlab 5 (including global trade data in 2000) [zip 15k] (previous version 11/30/2010)
  • converter sitc2isic [csv 13k] [stata9 51k]
    converter documentation [pdf 118k]
• data sources
  • exporter and product data SECEX (description by OECD)
  • formal employment and firm census RAIS (in portuguese)