How Exporters Grow (Job Talk)

Date : 

We use customs microdata to distinguish between competing models of demand and customer base. We purge supply-side variation from the data by comparing quantities and prices across markets within a firm. Higher quantities on entry forecast survival in an export market, but survival is unrelated to initial prices. Conditioning on survival, there is economically and statistically significant growth of quantities within a firm-market, but no dynamics of prices. These facts are consistent with a model of the demand side of firm growth where entrants to a market learn about idiosyncratic demand through quantities, generating selective exit, while survivors grow by accumulating customer base through marketing and advertising. They present a challenge to models where firms learn about idiosyncratic demand through prices, and to models where current demand depends on lagged sales