publication . Article . Preprint . 2015

Financial Constraints and International Trade with Endogenous Mode of Competition

Anne-Gaël Vaubourg; Antoine Bouët;
Open Access English
  • Published: 01 Jan 2015
  • Country: France
Abstract
The goal of this paper is to examine how financial constraints affect firms’ decisions to export when the mode of intra-sectoral competition is endogenous. We propose an extension of Neary and Tharakan’s (2012) model, in which firms resort to external funders to finance fixed export costs and investments in production capacities. We assume that sectors differ in financial constraint and that the cost of capital increases with the level of financial constraint. We first show that less financially vulnerable sectors are more likely to export. On the one hand, a high level of financial health allows firms to finance fixed export costs at a lower interest rate. On t...
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doi: 10.1016/j.jbankfin.2016.03.007
Subjects
free text keywords: finance, trade, exports, international trade policies, investment, oligopolistic competition, financial constraints,, Economics and Econometrics, Finance, Financial crisis, Cournot competition, International trade, business.industry, business, Economics, Cost of capital, Mode (statistics), Microeconomics, Indirect finance, Duopoly, Transmission channel, Bertrand competition
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