The Extensive Margin of Exporting Products: A Firm-level Analysis

Abstract

To quantify trade frictions, we examine multi-product exporters.We build a flexible general equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market-access cost shocks.Our estimates show that additional products farther from a firm's core competency come at higher production costs, but there are substantive economies of scope in market-access costs.Market-access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer non-tariff barriers.We evaluate a counterfactual scenario that harmonizes market-access costs across destinations and find global welfare gains similar to eliminating all current tariffs.

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