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Shipment frequency of exporters and demand uncertainty: An inventory management approach

Author

Listed:
  • Gabor Békés

    (Institute of Economics [Budapest] - Research Centre for Economic and Regional Studies - MTA - Hungarian Academy of Sciences)

  • Lionel Fontagné

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique)

  • Balazs Murakozy

    (Institute of Economics [Budapest] - Research Centre for Economic and Regional Studies - MTA - Hungarian Academy of Sciences)

  • Vincent Vicard

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Centre de recherche de la Banque de France - Banque de France)

Abstract

This paper studies how exporting firms optimize their inventory management in order to adapt to the uncertainty stemming from demand volatility. We motivate our analysis with a stochastic inventory management framework. We use monthly micro data on French exporters and find that greater uncertainty is associated with lower sales volume. We decompose this effect to its two margins, the number of shipments and average shipment size to find that the number of shipments decreases more quickly as uncertainty increases which is in line with firms adjusting their inventory policy as well as their exported volume as a result of increased uncertainty. Also, uncertainty was found to matter more at distant markets where the uncertainty between firm actions and the arrival of the products is the largest.

Suggested Citation

  • Gabor Békés & Lionel Fontagné & Balazs Murakozy & Vincent Vicard, 2015. "Shipment frequency of exporters and demand uncertainty: An inventory management approach," Working Papers hal-01315615, HAL.
    • Handle: RePEc:hal:wpaper:hal-01315615
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    References listed on IDEAS

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    3. Volpe Martincus, Christian, 2016. "Out of the Border Labyrinth: An Assessment of Trade Facilitation Initiatives in Latin America and the Caribbean," IDB Publications (Books), Inter-American Development Bank, number 7994, November.

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    More about this item

    Keywords

    firms; frequency of trade; gravity; inventory model; transport costs;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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