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The Location of US States' Overseas Offices
Author(s) -
Cassey Andrew J.
Publication year - 2014
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12109
Subject(s) - aggregate (composite) , transaction cost , database transaction , state (computer science) , business , economics , aggregate data , microeconomics , finance , computer science , database , statistics , materials science , algorithm , composite material , mathematics
Forty US states operated an overseas office in 2002. Treating overseas offices as sales offices, the model assumes offices facilitate exports by reducing the transaction cost of selling abroad. From theory, states operate an office if aggregate savings outweigh operating costs. Exploiting the differences in where states locate offices in the data, and controlling for aggregate characteristics, the paper estimates the impact of exports on the probability of an office existing. In addition, the average state savings from an office is 0.04–0.10% of exports, with a cut‐off threshold of US$850 million.