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Shipment Frequency of Exporters and Demand Uncertainty

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  • Gabor Békés
  • Lionel Gérard Fontagné
  • Balazs Murakozy
  • Vincent Vicard

Abstract

Firms adjust to differences in market size and demand uncertainty by changing the frequency and size of their export shipments. In our inventory model, transportation costs and optimal shipment frequency are determined on the basis of demand as well as inventory and per shipments costs. Using a cross section of monthly firm-product-destination level French export data we confirm that firms adjust on both margins for market size. In a stochastic setting, firms adjust to increased uncertainty by reducing their sales and, for a given export volume, by reducing their number of shipments and increasing their shipment size.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4734.

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Date of creation: 2014
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Handle: RePEc:ces:ceswps:_4734

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Keywords: gravity; transport costs; frequency of trade; inventory model; firms;

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  1. George Alessandria & Joseph Kaboski & Virgiliu Midrigan, 2008. "Inventories, lumpy trade, and large devaluations," Working Papers 08-3, Federal Reserve Bank of Philadelphia.
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  14. Hummels, David, 2001. "Time as a Trade Barrier," GTAP Working Papers 1152, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  15. Kristian Behrens & Pierre M. Picard, 2011. "Transportation, freight rates, and economic geography," CREA Discussion Paper Series 11-02, Center for Research in Economic Analysis, University of Luxembourg.
  16. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2011. "U.S. trade and inventory dynamics," Working Papers 11-6, Federal Reserve Bank of Philadelphia.
  17. Joern Kleinert & Julia Spies, 2011. "Endogenous Transport Costs in International Trade," IAW Discussion Papers, Institut für Angewandte Wirtschaftsforschung (IAW) 74, Institut für Angewandte Wirtschaftsforschung (IAW).
  18. Kropf, Andreas & Sauré, Philip, 2014. "Fixed costs per shipment," Journal of International Economics, Elsevier, Elsevier, vol. 92(1), pages 166-184.
  19. Leonardo Iacovone & BeataS. Javorcik, 2010. "Multi-Product Exporters: Product Churning, Uncertainty and Export Discoveries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 120(544), pages 481-499, 05.
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