The Buyer Margins of Firms' Exports

52 Pages Posted: 13 Aug 2013

See all articles by Jerónimo Carballo

Jerónimo Carballo

University of Maryland

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

Christian Volpe Martincus

Inter-American Development Bank

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Date Written: August 2013

Abstract

We use highly disaggregated firm-level export data from Costa Rica, Ecuador, and Uruguay over the period 2005-2008 to provide a precise characterization of firms' export margins, across products, destination countries, and crucially customers. We show that a firm's number of buyers and the distribution of sales across them systematically vary with the characteristics of its destination markets. While most firms serve only very few buyers abroad, the number of buyers and the skewness of sales across them increases with the size and the accessibility of destinations. We develop a simple model of selection with heterogeneous buyers and sellers consistent with these findings in which tougher competition induces a better alignment between consumers' ideal variants and firms' core competencies. This generates an additional channel through which tougher competition leads to higher productivity and higher welfare and hints at an additional source of gains from trade as long as freer trade fosters competition.

Keywords: Buyer Margins, Competition, Market Segmentation, Markups

JEL Classification: F12

Suggested Citation

Carballo, Jerónimo and Ottaviano, Gianmarco I.P. and Volpe Martincus, Christian, The Buyer Margins of Firms' Exports (August 2013). CEPR Discussion Paper No. DP9584, Available at SSRN: https://ssrn.com/abstract=2309228

Jerónimo Carballo (Contact Author)

University of Maryland ( email )

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

Christian Volpe Martincus

Inter-American Development Bank ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

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