New model reveals how uncertainty shapes international trade dynamics
The article discusses how uncertainty affects firms entering foreign markets. The researchers created a model that shows how firms make decisions based on the information available. They found that in markets with less uncertainty, the most productive firms are more likely to enter. Once a firm enters a market, its success or failure provides information to other firms, influencing their decisions to enter. The model explains changes in trade flows over time and why small firms may enter foreign markets less often than expected.