Costs of trade and self-selection into exporting and importing: the case of Turkish manufacturing firms

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Dalgic, Basak, Fazlioglu, Burcu and Gasiorek, Michael (2015) Costs of trade and self-selection into exporting and importing: the case of Turkish manufacturing firms. Economics (15). pp. 1-28. ISSN 1864-6042

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Abstract

This paper focuses on self-selection into trade by exporting and importing firms, and on the presence of differential variable and sunk costs between exporters and importers across different categories of imports. We use a rich and recent dataset for Turkish manufacturing firms for the period 2003-10.This allows us to provide a comprehensive analysis of firm heterogeneity and the connection between firm-level performance and international trade. We provide evidence on the remarkable heterogeneity across firms where only-importers (importers) perform better than only-exporters (exporters). We detect a self-selection effect for both importing and exporting firms with a stronger effect for importers. The results suggest that the nature of sunk
costs varies between importing and exporting activities with importers facing higher sunk costs. Tari§s represent a potentially important source of variation in the variable costs of trading. When taking the tariffs faced
by firms into account, we find that the self-selection effect associated with sunk costs is still present but greatly reduced with a smaller reduction for importers compared to exporters.

Item Type: Article
Additional Information: Published in Special Issue Micro-econometric Analyses of International Firm Activities
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences
H Social Sciences > HB Economic theory. Demography > HB0241 Production. Theory of the firm. Supply-side economics
Depositing User: Michael Gasiorek
Date Deposited: 14 Jul 2015 11:44
Last Modified: 06 Mar 2017 05:52
URI: http://sro.sussex.ac.uk/id/eprint/55334

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