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Shipment frequency of exporters and demand uncertainty

Author

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  • Békès, G.
  • Fontagné, L.
  • Murakozy, B.
  • Vicard, V.

Abstract

This paper analyzes how firms adjust to differences in market size and demand uncertainty by changing the frequency and size of their export shipments. In our inventory model, transportation costs and optimal shipment frequency are determined on the basis of demand as well as inventory and per shipments costs. Using a cross section of detailed monthly firm-product-destination level French export data we show that, in line with the predictions of the model, firms adjust on both margins for market size. In a stochastic setting, increased demand uncertainty is associated with larger logistics costs as well as a more convex marginal cost function. Firms adjust to increased uncertainty by reducing their sales and, for a given export volume, by reducing their number of shipments and increasing their shipment size. We show that these predictions of the model are in line with patterns in the data.

Suggested Citation

  • Békès, G. & Fontagné, L. & Murakozy, B. & Vicard, V., 2014. "Shipment frequency of exporters and demand uncertainty," Working papers 479, Banque de France.
  • Handle: RePEc:bfr:banfra:479
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    Cited by:

    1. Volpe Martincus, Christian & Carballo, Jerónimo & Graziano, Alejandro, 2015. "Customs," Journal of International Economics, Elsevier, vol. 96(1), pages 119-137.
    2. Hayakawa, Kazunobu & Laksanapanyakul, Nuttawut & Yoshimi, Taiyo, 2016. "Effect of import time on export patterns," IDE Discussion Papers 566, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    3. Alessandria, George & Choi, Horag & Kaboski, Joseph P. & Midrigan, Virgiliu, 2015. "Microeconomic uncertainty, international trade, and aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 69(C), pages 20-38.
    4. Straume, Hans-Martin, 2015. "Trade costs and Norwegian salmon export," Working Papers in Economics 06/15, University of Bergen, Department of Economics.
    5. Jerónimo Carballo & Georg Schaur & Alejandro Graziano & Christian Volpe Martincus, 2016. "Transit Trade," IDB Publications (Working Papers) 7688, Inter-American Development Bank.
    6. Jerónimo Carballo & Georg Schaur & Alejandro Graziano & Christian Volpe Martincus, 2016. "Transit Trade," IDB Publications (Working Papers) 94658, Inter-American Development Bank.

    More about this item

    Keywords

    Gravity; Transport costs; Frequency of trade; Inventory model; Firms.;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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