Exports and Externalities

This thesis, Exports and Externalities consists of three papers. The first chapter, Bridging Trade Barriers: Evaluating Models of Multi-Product Exporters, evaluates empirically the theoretical predictions of several models of multi-product exporters. For identification I use a quasi-natural experiment, the introduction of the Öresund bridge between southern Sweden and Denmark, to analyse the impact on firm behaviour. Using a difference-in-difference methodology, firms in the ’treated’ municipality, Malmö, are compared to firms in more geographically distant Gothenburg and Stockholm (’controls’). I find that the results are in line with the predictions in three of four cases. Notably, the only margin that has an ambiguous theoretical prediction, average trade value per product, accounts for 70-80% of the increase in trade value.

In the second chapter, The Superstar and the Followers: Intra-Firm Product Complementarity in International Trade, I investigate if exports of different products by the same firm are systematically interconnected. I find evidence that the exports of low-ranked (non-star) products of a firm complement the exports of a superstar(core) products to each destination. The results show that a 1% increase in the exports of the superstar core increases the exports
of non-star products by 0.376%. Hence, I find that the exports of non-star products complements the superstar while conversely, the same complementarity is not found using low-ranked products as placebo-superstars.

The third chapter, Linking Services to Manufacturing Exports, investigates how services are linked to exporters. We create a Localised Export Exposure (LEE) variable that captures the variation in demand for service inputs based on nearby exporters. Since service firms are much less geographically specialised than manufacturing firms, we observe a high variation in their exposure to demand changes. Our results show that a 1% increase in exports increases the
volume of sales of service firms by 0.2% (and employment within the firm by 0.06%). The results show also that the link is highly local and the strongest impact is within 20 km of the shock.