Intermediaries in International Trade: Direct Versus Indirect Modes of Export

National Bank of Belgium Working Paper No. 199

Tuck School of Business Working Paper No. 2011-88

43 Pages Posted: 17 Oct 2010 Last revised: 8 Mar 2012

Andrew B. Bernard

Tuck School of Business at Dartmouth; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Marco Grazzi

University of Bologna - Department of Economics; Scuola Superiore Sant'Anna - Laboratory of Economics and Management (L.E.M.)

Chiara Tomasi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM); Scuola Superiore Sant'Anna di Pisa

Multiple version iconThere are 3 versions of this paper

Date Written: October 1, 2010

Abstract

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different products than manufacturing exporters. In particular, high market-specific fixed costs of exporting, the (lack of) quality of the general contracting environment and product- specific factors play important roles in explaining the existence of export intermediaries. These underlying differences between direct and intermediary exporters have important consequences for trade flows. The ability of export intermediaries to overcome country and product fixed costs means that they can more easily respond along the extensive margin to external shocks. Intermediaries and direct exporters respond differently to exchange rate fluctuations both in terms of the total value of shipments and the number of products exported as well as in terms of prices and quantities. Aggregate exports to destinations with high shares of indirect exports are much less responsive to changes in the real exchange rate than are exports to countries served primarily by direct exporters.

Keywords: heterogeneous firms, international trade, intermediation, wholesalers, export entry costs, product adding and dropping, exchange rates

JEL Classification: D22, F12, F14, L22, L23

Suggested Citation

Bernard, Andrew B. and Grazzi, Marco and Tomasi, Chiara, Intermediaries in International Trade: Direct Versus Indirect Modes of Export (October 1, 2010). National Bank of Belgium Working Paper No. 199; Tuck School of Business Working Paper No. 2011-88. Available at SSRN: https://ssrn.com/abstract=1692586 or http://dx.doi.org/10.2139/ssrn.1692586

Andrew B. Bernard (Contact Author)

Tuck School of Business at Dartmouth ( email )

100 Tuck Hall
Hanover, NH 03755
United States
603-646-0302 (Phone)
603-646-9084 (Fax)

HOME PAGE: http://mba.tuck.dartmouth.edu/pages/faculty/Andrew.Bernard/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Marco Grazzi

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Scuola Superiore Sant'Anna - Laboratory of Economics and Management (L.E.M.) ( email )

Piazza Martiri della Liberta, n. 33
Pisa, 56127
Italy

HOME PAGE: http://www.cafed.sssup.it/~marco/

Chiara Tomasi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy

Scuola Superiore Sant'Anna di Pisa ( email )

Biblioteca Scuola Superiore Sant'Anna

Paper statistics

Downloads
129
Rank
172,107
Abstract Views
1,103