Journal Article
No. 2015-15 | May 19, 2015
Costs of Trade and Self-selection into Exporting and Importing: The Case of Turkish Manufacturing Firms

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. The authors use a rich and recent dataset for Turkish manufacturing firms for the period 2003–2010. This allows them to provide a comprehensive analysis of firm heterogeneity and the connection between firm-level performance and international trade. They provide evidence on the remarkable heterogeneity across firms where only-importers (importers) perform better than only-exporters (exporters). The authors 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. Tariffs represent a potentially important source of variation in the variable costs of trading. When taking the tariffs faced by firms into account, the authors 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.

JEL Classification:

D22, F14, L10

Assessment

  • Downloads: 1412 (Discussion Paper: 1048)

Links

Cite As

Basak Dalgic, Burcu Fazlioglu, and Michael Gasiorek (2015). Costs of Trade and Self-selection into Exporting and Importing: The Case of Turkish Manufacturing Firms. Economics: The Open-Access, Open-Assessment E-Journal, 9 (2015-15): 1—28. http://dx.doi.org/10.5018/economics-ejournal.ja.2015-15


Comments and Questions


JIDDAH M.A. AJAYI - cost of trade self selection
May 20, 2015 - 12:53

it was a very interesting,intriguing and well resecherched,topic.
quite educating.
i appreciate economics-ejournal for the enlightnment