Beyond Trade Costs: Firms’ Endogenous Access to International Markets

Contrary to what has been standard in the international trade literature, we argue that firms’ access to international markets should not be reduced only to exogenous factors such as trade costs. Instead, we defend that market access can also be related with endogenous factors such as strategic competition on R&D. In particular, we show that:(1) higher efficiency of R&D (like low trade costs) makes trade more easy (given that R&D increases the profitability of exports); (2) firms with a first-mover advantage in R&D have higher competitiveness levels, since they have larger incentives to innovate, and as a result these firms also have better access to export markets.