An Anatomy of International Trade: Evidence from French Firms

Jonathan Eaton, Samuel Kortum, Francis Kramarz

NBER Working Paper No. 14610
Issued in December 2008
NBER Program(s):Industrial Organization, International Trade and Investment, Productivity, Innovation, and Entrepreneurship

We examine the sales of French manufacturing firms in 113 destinations, including France itself. Several regularities stand out: (1) the number of French firms selling to a market, relative to French market share, increases systematically with market size; (2) sales distributions are very similar across markets of very different size and extent of French participation; (3) average sales in France rise very systematically with selling to less popular markets and to more markets. We adopt a model of firm heterogeneity and export participation which we estimate to match moments of the French data using the method of simulated moments. The results imply that nearly half the variation across firms that we see in market entry can be attributed to a single dimension of underlying firm heterogeneity, efficiency. Conditional on entry, underlying efficiency accounts for a much smaller variation in sales in any given market. Parameter estimates imply that fixed costs eat up a little more than half of gross profits. We use our results to simulate the effects of a counterfactual decline in bilateral trade barriers on French firms. While total French sales rise by around US$16 billion, sales by the top decile of firms rise by nearly US$23 billion. Every lower decile experiences a drop in sales, due to selling less at home or exiting altogether.

download in pdf format
   (501 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14610

Published: Jonathan Eaton & Samuel Kortum & Francis Kramarz, 2011. "An Anatomy of International Trade: Evidence From French Firms," Econometrica, Econometric Society, vol. 79(5), pages 1453-1498, 09. citation courtesy of

Users who downloaded this paper also downloaded* these:
Bernard, Eaton, Jenson, and Kortum w7688 Plants and Productivity in International Trade
Eaton, Eslava, Kugler, and Tybout w13531 Export Dynamics in Colombia: Firm-Level Evidence
Eaton, Kortum, and Kramarz w10344 Dissecting Trade: Firms, Industries, and Export Destinations
Arkolakis w14214 Market Penetration Costs and the New Consumers Margin in International Trade
Bernard, Jensen, Redding, and Schott w13054 Firms in International Trade
NBER Videos

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

Contact Us