To quantify trade frictions, we examine multiproduct exporters. We build a flexible general-equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market access cost shocks. Our estimates show that additional products farther from a firm's core competency come at higher production costs, but there are substantive economies of scope in market access costs. Market access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer nontariff barriers. We evaluate a counterfactual scenario that harmonizes market access costs across destinations and find global welfare gains similar to eliminating all current tariffs.
Arkolakis, Costas, Sharat Ganapati, and Marc-Andreas Muendler.
"The Extensive Margin of Exporting Products: A Firm-Level Analysis."
American Economic Journal: Macroeconomics,
Firm Behavior: Empirical Analysis
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Trade Policy; International Trade Organizations
Empirical Studies of Trade
Industrialization; Manufacturing and Service Industries; Choice of Technology
International Linkages to Development; Role of International Organizations