Firm Size and the Choice of Export Mode
In international trade models, it is typically assumed that manufacturers ship their goods directly to their foreign customers. In reality, however, many manufacturers call in trade intermediaries to perform this task for them. Which manufacturers make use of this option? Theory suggests that it is mostly the small firms which are not profitable enough to cover the high fixed costs of building an own distribution network abroad. Large and eefficient firms, on the contrary, prefer to export their goods directly. The present paper brings this hypothesis to a test. Using survey data from the World Bank Enterprise Survey conducted in Turkey in 2008, it shows that there is indeed a negative correlation between firm size and the relative importance of intermediated exports. This result is highly robust to the inclusion of a variety of controls, different estimation methods, and different measures of firm size.
|Date of creation:||29 Mar 2011|
|Date of revision:||29 Mar 2011|
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CEPR Discussion Papers
7696, C.E.P.R. Discussion Papers.
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