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The Role of Intermediaries in Facilitating Trade

  • JaeBin Ahn
  • Amit K. Khandelwal
  • Shang-Jin Wei

We provide systematic evidence that intermediaries play an important role in facilitating trade using a firm-level the census of China's exports. Intermediaries account for around 20% of China's exports in 2005. This implies that many firms engage in trade without directly exporting products. We modify a heterogeneous firm model so that firms endogenously select their mode of export - either directly or indirectly through an intermediary. The model predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for this prediction, and generate new facts regarding the activity of intermediaries.

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File URL: http://www.nber.org/papers/w15706.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15706.

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Date of creation: Jan 2010
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Publication status: published as 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.
Handle: RePEc:nbr:nberwo:15706
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