A Balls - and - Bins Model of Trade ∗

A number of stylized facts have been documented about the extensive margin of trade— whether to export or not, and, if so, how many products to how many destinations. We note that some of the reported facts would be expected to arise if exports shipments were randomly allocated across categories (e.g., product codes, destination countries). ey are, thus, not informative of the underlying economic decisions. We formalize the random assignment of shipments to categories as balls falling into bins, reproducing the structure inherent to disaggregate trade data. e balls-and-bins model quantitatively reproduces the prevalence of zero productlevel trade žows across export destinations. e model also accounts for rm-level facts: as in the data, most rms export a single product to a single country but these rms represent a tiny fraction of total exports. In contrast, the balls-and-bins cannot match the small fraction of exporters among U.S. rms and overpredicts their size premium relative to non-exporters. We argue that the balls-and-bins model is a useful statistical tool to discern the interesting facts in disaggregated trade data from patterns arising mechanically through chance.