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Inventory control and intermediation in global supply chains

Author

Listed:
  • Qu, Zhan
  • Raff, Horst
  • Schmitt, Nicolas

Abstract

The paper develops a simple theoretical model of inventory control in global supply chains. It identifies a role for intermediaries in managing inventory, and shows that inserting an intermediary as an additional link in a supply chain is profitable when demand volatility is high. It also provides conditions under which the intermediary handling inventory is located in the exporting versus the importing country. Trade liberalization in the form of less lumpy trade is shown to expand the role of export and import intermediaries but to have potentially negative effects on the volume of international trade and social welfare in the importing country.

Suggested Citation

  • Qu, Zhan & Raff, Horst & Schmitt, Nicolas, 2015. "Inventory control and intermediation in global supply chains," Kiel Working Papers 1993, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1993
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    References listed on IDEAS

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    More about this item

    Keywords

    international trade; supply chain; inventory; intermediation; lumpy trade;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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