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Shipment frequency of exporters and demand uncertainty: An inventory management approach

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  • Fontagné, Lionel
  • Békés, Gábor
  • Muraközy, Balázs
  • Vicard, Vincent

Abstract

This paper studies how exporting firms optimize their inventory management in order to adapt to the uncertainty stemming from demand volatility. We motivate our analysis with a stochastic inventory management framework. We use monthly micro data on French exporters and find that greater uncertainty is associated with lower sales volume. We decompose this effect to its two margins, the number of shipments and average shipment size to find that the number of shipments decreases more quickly as uncertainty increases which is in line with firms adjusting their inventory policy as well as their exported volume as a result of increased uncertainty. Also, uncertainty was found to matter more at distant markets where the uncertainty between firm actions and the arrival of the products is the largest.

Suggested Citation

  • Fontagné, Lionel & Békés, Gábor & Muraközy, Balázs & Vicard, Vincent, 2015. "Shipment frequency of exporters and demand uncertainty: An inventory management approach," CEPR Discussion Papers 11013, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11013
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    Cited by:

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    3. Volpe Martincus, Christian, 2016. "Out of the Border Labyrinth: An Assessment of Trade Facilitation Initiatives in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 7994.

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    More about this item

    Keywords

    Firms; Frequency of trade; Gravity; Inventory model; Transport costs;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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