Infant Formula Trade and Food Safety

Beginning in 2004, the Chinese formula market suffered from a string of contamination events from counterfeit formula in 2004, melamine in 2008 to mercury and aflatoxin (a human carcinogen) in 2012. In this paper, we seek to understand the effects of these safety concerns in a market which lacks product substitutes. Whereas the literature shows international flows for produce, beef, and poultry are changed by persistent contaminations, the international infant formula market is less responsive to repeated health concerns

Learning to Export: Export Growth and the Destination Decision of Firms

Abstract In this paper, I find evidence that the geographic expansion of firm exports occurs slowly over time and that a large share of export growth is due to incumbent exporters entering new destinations. I also show that aggregated trade data can underestimate this value and hide the differing composition of export destinations by entering and incumbent exporters. New exporters enter large countries and destinations with characteristics similar to their domestic market. Less similar, distant or less developed countries are entered by firms already exporting to other destinations. I formulate a dynamic general equilibrium model to test if these patterns are due to firms learning how to export (as other recent empirical findings have suggested), or exogenous factors such as productivity growth. In this model, heterogeneous firms experience learning in the form of market entry costs that depend on export history. When calibrated to Russian firm level data, I find that learning plays a significant role in explaining the observed entry patterns, which standard trade models cannot account for. Additionally, by taking learning into account and targeting particular export destinations, governments can better assess the impact of liberalizations. JEL Classification: F12, F13, F14, L1