Publication Type
Journal Article
Version
acceptedVersion
Publication Date
9-2021
Abstract
An influential hypothesis states that export pioneers are too few relative to social optimum because the first exporter's action creates an informational public good for all subsequent exporters. The hypothesis has been invoked to justify certain types of government interventions. We note, however, that such market failure requires two inequalities to hold simultaneously: the discovery cost is neither too low nor too high. Neither has to hold in the data. We propose a structural estimation framework to evaluate the hypothesis, and estimate the parameters based on the customs data of Chinese electronics exports. Our key finding is that "missing pioneers" is a low-probability event for large countries, but can be a serious problem for small economies.
Keywords
Trade, Market Failure, Missing Pioneers
Discipline
Asian Studies | Growth and Development
Research Areas
International Economics
Publication
Journal of Development Economics
Volume
152
First Page
1
Last Page
11
ISSN
0304-3878
Identifier
10.1016/j.jdeveco.2021.102705
Publisher
Elsevier
Embargo Period
7-15-2022
Citation
WEI, Shang-Jin; WEI, Ziru; and XU, Jianhuan.
On the market failure of “missing pioneers”. (2021). Journal of Development Economics. 152, 1-11.
Available at: https://ink.library.smu.edu.sg/soe_research/2484
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jdeveco.2021.102705