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Fixed costs per shipment

  • Kropf, Andreas
  • Sauré, Philip

Exporting firms do not only decide how much of their products they ship abroad but also at which frequency. Doing so, they face a trade-off between saving on fixed costs per shipments (by shipping large amounts infrequently) and saving on storage costs (by delivering just in time with small and frequent shipments). The firm's optimal choice defines a mapping from size and frequency of shipments to fixed costs per shipment. We use a unique dataset of Swiss cross-border trade on the transaction level to infer the size and shape of the underlying fixed costs. The inferred fixed costs are specific to each firm–country–product combination. Our results suggest that the fixed costs per shipment of the average Swiss exporter are large, ranging between 0.82% of the export value in our most conservative specification and 5.4%. We document that the imputed fixed costs per shipment correlate negatively with language commonalities, trade agreements and geographic proximity.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 92 (2014)
Issue (Month): 1 ()
Pages: 166-184

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Handle: RePEc:eee:inecon:v:92:y:2014:i:1:p:166-184
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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