Abstract
The fact that large manufacturing plants export relatively more than small plants has been at the foundation of much work in the international trade literature. We examine this fact using Census microdata on plant shipments from the Commodity Flow Survey. We show that the fact is not entirely an international trade phenomenon; part of it can be accounted for by the effect of distance, distinct from any border effect. Export destinations tend to be farther than domestic destinations, and large plants tend to ship farther distances even to domestic locations compared with small plants. We develop an extension of the Melitz (2003) model and use it to set up an analysis with model interpretations of ratios between large plant and small plant shipments that can be calculated with the data. We obtain a decomposition of the overall ratio into a term that varies with distance, holding fixed the border, and a term that varies with the border, holding fixed the distance. The distance term accounts for more than half of the overall difference.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 91-103 |
| Number of pages | 13 |
| Journal | Journal of International Economics |
| Volume | 88 |
| Issue number | 1 |
| DOIs | |
| State | Published - Sep 2012 |
Bibliographical note
Funding Information:We thank Ann Macheras, Hajime Takatsuka, Andrés Rodríguez-Clare, and Costas Arkolakis for discussion comments. We have benefited from working at the Center for Economic Studies at the Census Bureau, and particularly thank Shawn Klimek, Arnie Reznek, and Lynn Riggs. Holmes' research was funded by the National Science Foundation (NSF) under grant SES 0551062 ; Holmes also gratefully acknowledges Support at the U.S. Census Bureau's Suitland Research Data Center from NSF ( ITR-0427889 ).
Keywords
- Border effect
- Commodity Flow Survey
- International trade
- Plant size