NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Testing the Melitz Model of Trade: An Application to U.S. Motion Picture Exports

Gordon H. Hanson, Chong Xiang

NBER Working Paper No. 14461
Issued in October 2008
NBER Program(s):   ITI

In this paper, we develop a simple empirical method to test two alternative versions of the Melitz (2003) model, one with global fixed export costs and one with bilateral fixed export costs. With global costs, import sales per product variety (relative to domestic sales per variety) are decreasing in variable trade barriers, as a result of adjustment occurring along the intensive margin of trade. With bilateral costs, imports per product variety are increasing in fixed trade costs, due to adjustment occurring along the extensive margin. We apply our approach to data on imports of U.S. motion pictures in 46 countries over 1995-2006. Imports per product variety are decreasing in geographic distance, linguistic distance, and other measures of trade costs, consistent with adjustment to these costs occurring along the intensive margin. There is relatively little variation in the number of U.S. movies that countries import but wide variation in the box-office revenues per movie. The data thus appear to reject the bilateral-fixed-export-cost model in favor of the global-fixed-export-cost model.

download in pdf format
   (563 K)

email paper

This paper is available as PDF (563 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14461

Users who downloaded this paper also downloaded these:
Hallward-Driemeier, Iarossi, and Sokoloff w8894 Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data
Hanson and Xiang International Trade in Motion Picture Services
Baldwin w11471 Heterogeneous Firms and Trade: Testable and Untestable Properties of the Melitz Model
Melitz w8881 The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity
Demidova and Rodriguez-Clare w17521 The Simple Analytics of the Melitz Model in a Small Open Economy
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us