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Firm Size and the Choice of Export Mode

Author

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  • Jennifer Abel-Koch

    () (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)

Abstract

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.

Suggested Citation

  • Jennifer Abel-Koch, 2011. "Firm Size and the Choice of Export Mode," Working Papers 1105, Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz, revised 29 Mar 2011.
  • Handle: RePEc:jgu:wpaper:1105
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    File URL: http://www.macro.economics.uni-mainz.de/RePEc/pdf/Discussion_Paper_1105.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
    1. Pol Antrás & Arnaud Costinot, 2010. "Intermediation and Economic Integration," American Economic Review, American Economic Association, vol. 100(2), pages 424-428, May.
    2. Pol Antràs & Arnaud Costinot, 2011. "Intermediated Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1319-1374.
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    Citations

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    Cited by:

    1. Fergal McCann, 2013. "Indirect Exporters," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 519-535, December.
    2. Ronald B. Davies & Tine Jeppesen, 2012. "Export mode, Trade Costs, and Productivity Sorting," Working Papers 201225, School of Economics, University College Dublin.
    3. Crozet, Matthieu & Lalanne, Guy & Poncet, Sandra, 2013. "Wholesalers in international trade," European Economic Review, Elsevier, vol. 58(C), pages 1-17.
    4. -, 2012. "Latin American Economic Outlook 2013: SMEs policies for structural change," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1464 edited by Oecd, May.
    5. Gabor Bekes & Balázs Murakozy, 2015. "The ladder of foreign sales: Internationalization modes of European firms," IEHAS Discussion Papers 1527, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    6. Gabriel Felbermayr & Benjamin Jung, 2011. "Trade Intermediation and the Organization of Exporters," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 634-648, September.
    7. repec:bla:worlde:v:40:y:2017:i:7:p:1381-1404 is not listed on IDEAS
    8. -, 2012. "Perspectivas económicas de América Latina 2013: políticas de PYMES para el cambio estructural," Coediciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1463 edited by Ocde, May.
    9. Umberto Medicamento & Bernardo De Gennaro & Arturo Casieri, 2013. "La competitività del settore dell’olio di oliva attraverso l’analisi del network degli scambi commerciali internazionali," ECONOMIA AGRO-ALIMENTARE, FrancoAngeli Editore, vol. 15(1), pages 103-122.
    10. Fergal Mccann, 2010. "Indirect exporters," Working Papers halshs-00963335, HAL.
    11. Patricia Sourdin & Richard Pomfret, 2012. "Trade Facilitation," Books, Edward Elgar Publishing, number 14596.

    More about this item

    Keywords

    Heterogeneous firms; intermediated trade;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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