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Intermediation in Foreign Trade: When Do Exporters Rely on Intermediaries?

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  • Philipp J. H. Schröder
  • Harald Trabold
  • Parvati Trübswetter

Abstract

The paper explores theoretically and empirically why trade intermediaries (TIs) are frequently used as agents for exports to some countries but not to others. We adapt a standard intra-industry trade model with variable export costs (e.g. transport) and fixed export costs (e.g. market access) to include a TI that is able to pool market access cost. From this framework explanatory factors for the TI share in a country's exports are derived and subsequently tested with a new data set based on French customs information. The paper finds that: (i) higher market access costs increase the TI share, (ii) smaller export markets feature a larger TI share, (iii) the TI share is independent from variable (distance-dependent) export costs.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40234.de/dp336.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 336.

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Length: 20 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp336

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Keywords: trade intermediation; indirect exports; transaction costs; monopolistic competition;

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References

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  1. Venables, Anthony J, 1987. "Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 97(387), pages 700-717, September.
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  3. James E. Rauch & Vitor Trindade, 2002. "Ethnic Chinese Networks In International Trade," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 116-130, February.
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  7. Gordon H. Hanson & Robert C. Feenstra, 2001. "Intermediaries in Entrepot Trade: Hong Kong Re-Exports of Chinese Goods," NBER Working Papers 8088, National Bureau of Economic Research, Inc.
  8. Baye, Michael R & Cosimano, Thomas F, 1990. "Choosing Sides in Matching Games: Nash Equilibria and Comparative Statics," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 57(227), pages 283-93, August.
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  12. Daniel F. Spulber, 1996. "Market Microstructure and Intermediation," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 10(3), pages 135-152, Summer.
  13. Anthony Venables, 1994. "Integration and the export behaviour of firms: Trade costs, trade volumes and welfare," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 130(1), pages 118-132, March.
  14. Dani Rodrik, 2000. "How Far Will International Economic Integration Go?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(1), pages 177-186, Winter.
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Citations

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Cited by:
  1. Jennifer Abel-Koch, 2013. "Who Uses Intermediaries in International Trade? Evidence from Firm-level Survey Data," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 36(8), pages 1041-1064, 08.
  2. Latouche, Karine & Rouviere, Elodie, 2011. "Brokers vs. Retailers: Evidence from the French Imports Industry of Fresh Produce," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland, European Association of Agricultural Economists 114398, European Association of Agricultural Economists.
  3. Felbermayr, Gabriel J. & Jung, Benjamin, 2008. "Trade intermediaries, incomplete contracts, and the choice of export modes," Tübinger Diskussionsbeiträge 317, University of Tübingen, School of Business and Economics.
  4. Jens Krüger, 2009. "How Do Firms Organize Trade? Evidence from Ghana," Kiel Advanced Studies Working Papers, Kiel Institute for the World Economy 449, Kiel Institute for the World Economy.

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