Ramondo, Natalia, Rappoport, Veronica and Ruhl, Kim J. (2013) The proximity-concentration tradeoff under uncertainty. Review of Economic Studies, 80 (4). pp. 1582-1621. ISSN 0034-6527
- Accepted Version
Restricted to Repository staff only until 6 October 2015.
In this article, we analyse the firm's choice between serving a foreign market through exports or through foreign affiliate sales in an environment characterized by country-specific shocks to the cost of production. Our model predicts that country pairs with less-correlated output fluctuations trade more, relative to affiliate sales, whereas countries with more-volatile fluctuations are served relatively more by exporters than by foreign affiliates selling abroad. Using detailed data on trade and affiliate sales, we find empirical support for our model's predictions.
|Additional Information:||© 2013 The Author|
|Library of Congress subject classification:||H Social Sciences > HF Commerce|
|Sets:||Departments > Management
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > Managerial Economics and Strategy Group
|Funders:||National Science Foundation|
|Date Deposited:||12 Nov 2013 10:05|
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