PhD-defense: Export costs influence on international trade
On Thursday 28 November 2013 Hege Medin will hold a trial lecture on a prescribed topic, and on Friday 29 November 2013 she will defend her thesis for the PhD degree at NHH.
20.11.2013 - Red.
International trade involves trade costs of several types. Some costs are variable, whereas others are one-time fixed costs that are independent of the volumes traded - sunk costs. Sunk export costs typically accrue when firms enter new export markets. They are related to gathering information about foreign markets, finding customers or adapting products to foreign standards. The thesis investigates the importance of sunk export costs for firms' export decisions and international trade patterns.
In the thesis, sunk export costs are incorporated into two theoretical models of international trade. A key result in standard models is the 'home market effect'. It holds that small countries will have a lower share of the world's production and exports of manufacturing goods than what their size would indicate. In contrast, the present thesis shows that if firms face sunk export costs, the home market effect in exports may be reversed: small countries are found to have a higher share of the world's export of manufacturing goods than their size would indicate.
In consequence, small countries will have a larger proportion of manufacturing exporters than large countries. Empirical support for this result is found in a sample of 116 countries, showing that the proportion of manufacturing firms that export decreases with GDP.
Further, the thesis presents an analysis of Norwegian seafood exporters. The results indicate that firms face sunk costs in exporting a particular product to a particular country. Previous studies have focused on sunk costs of exporting as such, or exporting to a particular country, so this is a new result. The analysis further indicates that export costs may be reduced through various kinds of learning effects. Firms may learn about exporting from their own experience as well as that of other firms. Presence in markets emerges more important than export volume for learning.
Prescribed topic for the trial lecture:
New trade theory: Implications for industrial policy.
Date, time and place of the trial lecture:
28.11. 17:00 at Norwegian Institute of International Affairs, C.J. Hambros plass 2 D, Oslo.
Title of the thesis:
Sunk export costs: How they influence firms' export decisions and international trade.
Date, time and place for the defense:
29.11. 10:00 at The Norwegian Institute of International Affairs, C.J. Hambros plass 2 D. Oslo.
Members of the evaluation committee:
Professor Kjetil Bjorvatn, NHH (Chair)
Professor Rikard Forslid, Stockholms Universitet
Lecturer Stefanie Haller, University College Dublin
Supervising committee:
Associate professor Ragnhild Balsvik, NHH, principal supervisor
Arne Melchior Senior Research Fellow, The Norwegian Institute of International Affairs
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