Self-selection Along Different Export And Import Markets
Source: Scuola Superiore Sant'Anna
How are firms' performances influenced by the specific characteristics of markets where exports are directed and imports originate from? Using a rich database on Italian manufacturing firms, this essay adds new evidence on the relationship between trade status and firm characteristics. The authors show that different destinations of exports and different origins of imports map into distinctive firm characteristics. They test the hypothesis that the self-selection mechanisms occur market to market. They observe that firms exporting to and importing from high income countries face higher sunk costs than those trading with less developed markets.