Working Paper: NBER ID: w16046
Authors: Thomas J. Holmes; John J. Stevens
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 micro data on plant shipments from the Commodity Flow Survey. We show 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 further than domestic destinations, and large plants tend to ship further distances even to domestic locations, as 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.
Keywords: exports; borders; distance; plant size
JEL Codes: F1; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Plant Size (L25) | Export Likelihood (C59) |
| Plant Size (L25) | Shipping Distance (L87) |
| Distance (R12) | Export Likelihood (C59) |
| Distance (R12) | Plant Size-Export Relationship (F10) |
| Plant Size (L25) | Plant Size-Export Relationship (F10) |