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Do exporting firms benefit from retail internationalization? Evidence from France

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  • Angela Cheptea

    () (UMR 1302 Structures et Marchés Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST - SMART - Structures et Marchés Agricoles, Ressources et Territoires)

  • Charlotte Emlinger

    (Centre d'Etudes Prospectives et d'Informations Internationales)

  • Karine Latouche

    () (LERECO CEDRAN - Laboratoire d'Études et de Recherches en Economie - INRA - Institut National de la Recherche Agronomique)

Abstract

We explore the link between globalization of the retail sector and the export activity of firms from their origin country. In a previous paper (Cheptea et al., 2015), we showed that exporting firms from countries with internationalized retail companies benefit more from this process than firms from other countries. Two mechanisms can explain this effect: a trade cost advantage for retailers’ domestic suppliers, or a shift in foreign demand from which benefit all origin country firms. In this paper we question which of the two mechanisms dominates. For that, we test whether retailers’ supplying firms benefit more from the overseas expansion of retailers than other origin country firms. We employ French firm-level data to evaluate the effect for the two types of firms. We identify retailers’ suppliers as firms that sell their products under French retailers’ brands or labels, i.e. French firms certified with the IFS standard. Our empirical objective is to estimate whether firms with IFS certification have better export performance on markets where French retailers operate. We find that certified French firms are more likely to export, and export larger volumes, than non-certified firms to markets where French retailers established outlets. We also show that when French retailers close down their activities in a market, IFS firms face a drop in exports to this market in the subsequent years. The results are robust to the use of different sets of firm- and country-specific fixed effects, are unaffected by possible selection and endogeneity biases, and the presence in export markets of other retailers. This difference in behavior for certified and non-certified exporting firms confirms the trade cost advantage of retailers’ suppliers, which is lost when French retailers exit from the destination country

Suggested Citation

  • Angela Cheptea & Charlotte Emlinger & Karine Latouche, 2015. "Do exporting firms benefit from retail internationalization? Evidence from France," Working Papers hal-01209066, HAL.
  • Handle: RePEc:hal:wpaper:hal-01209066
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01209066
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    References listed on IDEAS

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    1. Raff, Horst & Schmitt, Nicolas, 2015. "Retailing and international trade: A survey of the literature," Economics Working Papers 2015-02, Christian-Albrechts-University of Kiel, Department of Economics.
    2. Eaton, Jonathan & Kortum, Samuel, 2001. "Trade in capital goods," European Economic Review, Elsevier, vol. 45(7), pages 1195-1235.
    3. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
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    5. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
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    7. Cheptea, Angela & Emlinger, Charlotte & Latouche, Karine, 2012. "Multinational Retailers and Home Country Exports," 2012: New Rules of Trade?, December 2012, San Diego, California 142777, International Agricultural Trade Research Consortium.
    8. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 43(3), pages 135-148, May.
    9. Matthieu Crozet & Keith Head & Thierry Mayer, 2012. "Quality Sorting and Trade: Firm-level Evidence for French Wine," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 609-644.
    10. Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May.
    11. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
    12. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    13. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, May.
    14. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity (DOI:10.111/j.1467-937x.2007.00463.x)," Review of Economic Studies, Oxford University Press, vol. 75(3), pages 985-985.
    15. John A. Dawson, 2007. "Scoping and conceptualising retailer internationalisation," Journal of Economic Geography, Oxford University Press, vol. 7(4), pages 373-397, July.
    16. Karine Latouche & Emmanuelle Chevassus-Lozza, 2015. "Retailer Supply Chain and Market Access: Evidence From French Agri-food Firms Certified with Private Standards," The World Economy, Wiley Blackwell, vol. 38(8), pages 1312-1334, August.
    17. Angela Cheptea & Charlotte Emlinger & Karine Latouche, 2015. "Multinational Retailers and Home Country Food Exports," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 159-179.
    18. Head, Keith & Jing, Ran & Swenson, Deborah L., 2014. "From Beijing to Bentonville: Do multinational retailers link markets?," Journal of Development Economics, Elsevier, vol. 110(C), pages 79-92.
    19. repec:fth:bosecd:110 is not listed on IDEAS
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    21. Emmanuelle Chevassus-Lozza & Karine Latouche, 2012. "Firms, markets and trade costs: access of French exporters to European agri-food markets," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 39(2), pages 257-288, April.
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    Cited by:

    1. Charlotte Emlinger & Sandra Poncet, 2016. "With a Little Help from My Friends: Multinational Retailers and China's consumer Market Penetration," Working Papers 2016-01, CEPII research center.

    More about this item

    Keywords

    firm-level exports; multinational retailers; private standards;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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