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

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Author Info
Trabold, Harald (DIW Berlin)
Parvati Trubswetter
Philipp J H Schroder

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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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Publisher 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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Related research
Keywords: trade intermediation; indirect exports; monopolistic competition;

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Find related papers by JEL classification:
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
F10 - International Economics - - Trade - - - General
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F15 - International Economics - - Trade - - - Economic Integration
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Mike W Peng & Anne Y Ilinitch, 1998. "Export Intermediary Firms: A Note on Export Development Research," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 29(3), pages 609-620, September. [Downloadable!] (restricted)
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  3. Venables, Anthony J, 1987. "Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model," Economic Journal, Royal Economic Society, vol. 97(387), pages 700-717, September. [Downloadable!] (restricted)
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  5. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June. [Downloadable!] (restricted)
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  7. Krugman, Paul R, 1981. "Intraindustry Specialization and the Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 959-73, October. [Downloadable!] (restricted)
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  9. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December. [Downloadable!] (restricted)
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  11. 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, vol. 57(227), pages 283-93, August. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
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  13. North, Douglass C, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter. [Downloadable!] (restricted)
  14. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  15. Hsing, You-tien, 1999. "Trading companies in Taiwan's fashion shoe networks," Journal of International Economics, Elsevier, vol. 48(1), pages 101-120, June. [Downloadable!] (restricted)
  16. Zhihao Yu, 2002. "Entrepreneurship and intra-industry trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(2), pages 277-290, June. [Downloadable!] (restricted)
  17. James E. Rauch & Vitor Trindade, 1999. "Ethnic Chinese Networks in International Trade," NBER Working Papers 7189, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jens Krüger, 2009. "How Do Firms Organize Trade? Evidence from Ghana," Kiel Advanced Studies Working Papers 449, Kiel Institute for the World Economy. [Downloadable!]
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