  Industries can enter one country first, and then enter its neighbors'
markets. Firms in the industry can expand trade network through the export
behavior of other firms in the industry. If a firm is dependent on a few
foreign markets, the political risks of the markets will hurt the firm. The
frequent trade disputes reflect the importance of the choice of export
destinations. Although the market diversification strategy was proposed before,
most firms still focus on a few markets, and the paper shows reasons.In this
paper, we assume the entry cost of firms is not all sunk cost, and show 2 ways
that product heterogeneity impacts extensive margin of exports theoretically
and empirically. Firstly, the increase in product heterogeneity promotes the
increase in market power and profit, and more firms are able to pay the entry
cost. If more firms enter the market, the information of the market will be
known by other firms in the industry. Firms can adjust their behavior according
to other firms, so the information changes entry cost and is not sunk cost
completely. The information makes firms more likely to entry the market, and
enter the surrounding markets of existing markets of other firms in the
industry. When firms choose new markets, they tend to enter the markets with
few competitors first.Meanwhile, product heterogeneity will directly affect the
firms' network expansion, and the reduction of product heterogeneity will
increase the value of peer information. This makes firms more likely to entry
the market, and firms in the industry concentrate on the markets.
