Learning, Externalities, and Export Dynamics : Evidence from Chilean Exporters

This paper presents a model of exporting with demand uncertainty where incumbent firms reveal signals about a shared component of demand that potential entrants use to update beliefs. Using Chilean export data, these signals within disaggregated product-destination markets are estimated and then used to examine the effects of revealed information on potential entrants along three margins: entry into new markets, the quantity of output sold, and the duration of trade spells. A one-standard-deviation-increase in the signal revealed by incumbents is associated with a 6.3% increase in the probability of entry, an 11.7% increase in first-year export volume, and a 0.6% increase in the duration of exporting. Consistent with uncertain demand, the measured effects of spillovers are larger in countries that are further from Chile, in countries where Spanish is not an official language, for more homogeneous products, and for larger firms