Table 5 presents the results. Tariff levels do not affect the probability to exit after one year, but a tariff reduction does. However its effect is very small (0.001) and it disappears once we control for the exporter’ location and sectors characteristics. The coefficients of the remaining variables are similar to those from our previous exercise and are consistent across all three specifications, except for the product share and exporter experience. Results in the first and fourth specifications, suggest that the larger the share of a product in the export mix, the higher the probability to stop exporting this product. The effect becomes negative once we include the other controls. As for the effect of export experience, it increases the probability of exit. In other words, the probability to exit after one year is larger for re-entrants. This suggests that a previous experience does not necessarily improve export survival if that experience was not continuous.

As before, market and product experience decrease the probability to exit after one year. Product experience seems to improve the likelihood of exporting in the second year more than market experience. Finally, multi-product exporters, as well as exporters located in an EZ or in a comparative advantage sector show a higher probability to survive in the second year. Moreover the interaction term between the tariffs cuts and the NRCA is significant thus suggesting that the effect of tariff cuts is amplified in the sectors with a comparative advantage. The interaction term between the tariff levels and the NCRA does not exhibit any significant effect.

# **7. Conclusions**

Thanks to the implementation of the DR-CAFTA in 2007, Dominican exporters face now better market access in the U.S., but also in El Salvador, Guatemala, Honduras and Nicaragua. Using an original firmlevel dataset with exports by product and destination for the 2002-2009 period, this paper looks at the Dominican exporters’ responses following the agreement and analyzes whether increased market access supported the expansion of the extensive margin and improved exporters survival. Based on the theoretical findings of Melitz (2003) and Bernard, Redding and Schott (2009), we test the effect of tariff reductions on (i) the number of new exporters, (ii) the number of existing exporters that added a new product-market relationship to their export mix and (iii) the probability to exit a given market.

Our results suggest that tariff reductions had a positive but very small effect on the number of new exporters. A similar result is found in the case of incumbent exporters. Tariff preferences seem to affect the behavior of existent exporters but the effect is also fairly small. Such effects could suggest that there may be other trade barriers such as standards, phytosanitary requirements, credit constraints and transport costs, among others that could be preventing exporters from taking full advantage of the agreement. This implies that beyond tariffs further efforts must be undertaken to identify the factors that are constraining exporters from benefitting from the agreement. This is also essential for the design of complementary policies aiming at stimulate export participation.

Finally we also look at the relationship between export survival and tariff preferences. Survival among Dominican exporters is very low six out of ten exporters exit the export market after one year. We test whether tariff cuts help exporters consolidate their position in a market and diminish their probability to exit. We find that tariff cuts do improve survival rates, especially among experienced exporters, although the effect is very small (0.001). Compared to experienced exporters, new entrants are smaller, and probably more sensitive to other factors, which could explain why tariff cuts does not necessarily affect 22