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Sunk exporting costs and export market coverage
Author(s) -
Fichera Eleonora,
Shevtsova Yevgeniya
Publication year - 2020
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12311
Subject(s) - sunk costs , destinations , economics , distribution (mathematics) , variable (mathematics) , export performance , international economics , international trade , monetary economics , microeconomics , mathematical analysis , mathematics , tourism , political science , law
This paper provides evidence on the role of sunk costs in the market expansion of continuing exporters, explicitly accounting for the number of target export destinations. We use dynamic count data models to address the discrete non‐negative nature and skewed distribution of the dependent variable, the number of export markets. By examining the trade patterns of individual firms, we find that past export market coverage significantly improves the ability of Ukrainian exporters for further expansion. The results also indicate that information spillovers from neighbouring firms and foreign ownership are not important factors for the market expansion of incumbent exporters.