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. The success or failure of one firm entering a market influences other firms' decisions to enter. This model helps explain changes in trade flows over time and why small firms may not enter foreign markets as much as expected.