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arXiv · 2502.03406

Estimating Export-productivity Cutoff Contours with Profit Data: A Novel Threshold Estimation Approach

Peter H. Egger·Yulong Wang
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Abstract

This paper develops a novel method to estimate firm-specific market-entry thresholds in international economics, allowing fixed costs to vary across firms alongside productivity. Our framework models market entry as an interaction between productivity and observable fixed-cost measures, extending traditional single-threshold models to ones with set-valued thresholds. Applying this approach to Chinese firm data, we estimate export-market entry thresholds as functions of domestic sales and surrogate variables for fixed costs. The results reveal substantial heterogeneity and threshold contours, challenging conventional single-threshold-point assumptions. These findings offer new insights into firm behavior and provide a foundation for further theoretical and empirical advancements in trade research.

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Peter H. Egger, Yulong Wang. 2025-02-05. Estimating Export-productivity Cutoff Contours with Profit Data: A Novel Threshold Estimation Approach. https://arxiv.org/abs/2502.03406

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