(Job Market Paper)
Export entry deterrence is a result of export uncertainty, which inhibits export discovery and prevents a country from realizing its true comparative advantage. This paper examines how uncertainty influences firm export entry decisions. In combining a “learning from neighbors” framework with the theory of sequential exporting, I analyze how firms resolve uncertainty through the combination of two learning channels – learning from their own experience and other local exporters. My model emphasizes that potential entrants face a tradeoff between more accurate information and competition. The novel result of the model is that less experienced firms are more responsive to new information. Using data from Chilean exports (2003 - 2016), the paper discovers that the amount of acquired experience in combination with information gathered from other exporters defines a firm’s probability of entry into highly uncertain markets.
Multinational Companies and Self-Discovery in Exporting: Empirical Investigation of Chilean Exports between 2003 and 2016
(joint with Volodomyr Lugovskyy)