Are sunk costs in exporting country specific?

Abstract

Abstract Previous studies have shown that there are significant sunk entry costs in exporting. However, the empirical literature has not addressed whether these costs are global or country specific. In this paper, I show that both are present and estimate that country‐specific costs are about three times the magnitude of global costs. Furthermore, I show that international standards harmonization has strong positive effects on imported variety in small and remote markets. Calibration of a modified Chaney (2008) model indicates that these markets will gain access to 3–4% more imported varieties when global costs increase by 10%, holding total entry costs constant.

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