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BY 4.0 license Open Access Published by De Gruyter Open Access May 19, 2015

Costs of Trade and Self-selection into Exporting and Importing: The Case of Turkish Manufacturing Firms

  • Basak Dalgic , Burcu Fazlioglu EMAIL logo and Michael Gasiorek
From the journal Economics

Abstract

This paper focuses on self-selection into trade by exporting and importing firms, and on the presence of differential variable and sunk costs between exporters and importers across different categories of imports. The authors use a rich and recent dataset for Turkish manufacturing firms for the period 2003–2010. This allows them to provide a comprehensive analysis of firm heterogeneity and the connection between firm-level performance and international trade. They provide evidence on the remarkable heterogeneity across firms where only-importers (importers) perform better than only-exporters (exporters). The authors detect a self-selection effect for both importing and exporting firms with a stronger effect for importers. The results suggest that the nature of sunk costs varies between importing and exporting activities with importers facing higher sunk costs. Tariffs represent a potentially important source of variation in the variable costs of trading. When taking the tariffs faced by firms into account, the authors find that the self-selection effect associated with sunk costs is still present but greatly reduced with a smaller reduction for importers compared to exporters.

JEL Classification: D22; F14; L10

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Received: 2015-02-27
Revised: 2015-04-28
Accepted: 2015-04-30
Published Online: 2015-05-19
Published in Print: 2015-12-01

© 2015 Basak Dalgic et al., published by Sciendo

This work is licensed under the Creative Commons Attribution 4.0 International License.

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