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

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  • Trabold, Harald

    (DIW Berlin)

  • Parvati Trubswetter
  • Philipp J H Schroder

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 countryÕs 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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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 206.

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Date of creation: 04 Jun 2003
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Handle: RePEc:ecj:ac2003:206

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Keywords: trade intermediation; indirect exports; monopolistic competition;

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References

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  8. Spence, Michael, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Wiley Blackwell, vol. 43(2), pages 217-35, June.
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  13. Dani Rodrik, 2000. "How Far Will International Economic Integration Go?," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 177-186, Winter.
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Cited by:
  1. Jennifer Abel-Koch, . "Who uses intermediaries in international trade? Evidence from firm-level survey data," Discussion Papers 11/25, University of Nottingham, GEP.
  2. 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.
  3. Latouche, Karine & Rouviere, Elodie, 2012. "Brokers vs. Retailers: Evidence from the French Imports Industry of Fresh Produce," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123331, Agricultural and Applied Economics Association.
  4. Jens Krüger, 2009. "How Do Firms Organize Trade? Evidence from Ghana," Kiel Advanced Studies Working Papers 449, Kiel Institute for the World Economy.

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