TY  - JOUR
AU  - Hallak,Juan Carlos
AU  - Sivadasan,Jagadeesh
TI  - Firms' Exporting Behavior under Quality Constraints
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14928
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14928
L1  - http://www.nber.org/papers/w14928.pdf
N1  - Author contact info:
Juan Carlos Hallak
Universidad de San Andrés
Departamento de Economía
Vito Dumas 284 (B1644BID)
Victoria, Provincia de Buenos Aires
ARGENTINA
Tel: (5411) 4725-7081
Fax: (5411) 4725-7010
E-Mail: jchallak@udesa.edu.ar

Jagadeesh Sivadasan
University of Michigan
Ross School of Business
701 Tappan, Room R4310
Ann Arbor, MI 48103
Tel: 7348468165
Fax: 7347642557
E-Mail: jagadees@umich.edu
AB  - We develop a model of international trade with export quality requirements and two dimensions of firm heterogeneity. In addition to "productivity", firms are also heterogeneous in their "caliber" -- the ability to produce quality using fewer fixed inputs. Compared to single-attribute models of firm heterogeneity emphasizing either productivity or the ability to produce quality, our model provides a more nuanced characterization of firms' exporting behavior. In particular, it explains the empirical fact that firm size is not monotonically related with export status: there are small firms that export and large firms that only operate in the domestic market. The model also delivers novel testable predictions. Conditional on size, exporters are predicted to sell products of higher quality and at higher prices, pay higher wages and use capital more intensively. These predictions, although apparently intuitive, cannot be derived from single-attribute models of firm heterogeneity as they imply no variation in export status after size is controlled for. We find strong support for the predictions of our model in manufacturing establishment datasets for India, the U.S., Chile, and Colombia.
ER  -