The Buyer Margins of Firms' Exports

62 Pages Posted: 28 Nov 2016 Last revised: 11 Jan 2018

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: November 24, 2016

Abstract

We use detailed data on exporters from Costa Rica, Ecuador and Uruguay as well as on their buyers to show that: aggregate exports are disproportionally driven by few multi-buyers exporters; and each multi-buyer exporter's foreign sales of any product are in turn accounted for by few dominant buyers. We propose an analytically solvable multi-country model of endogenous selection in which dominant exporters, dominant products and dominant buyers emerge in parallel as multi-product sellers with heterogeneous technologies compete for buyers with heterogeneous needs. The model not only provides an explanation of the existence of dominant buyers but also makes specific predictions on how the relative importance of dominant buyers should vary across export destinations depending on their market size and accessibility. We show that these predictions are borne out by our data and discuss their welfare implications in terms of gains from trade.

Keywords: Firm heterogeneity, taste heterogeneity, import-export relations, competition, selection

JEL Classification: F12, F14

Suggested Citation

Carballo, Jerónimo and Ottaviano, Gianmarco I.P. and Volpe Martincus, Christian, The Buyer Margins of Firms' Exports (November 24, 2016). CFS Working Paper, No. 561, Available at SSRN: https://ssrn.com/abstract=2875394 or http://dx.doi.org/10.2139/ssrn.2875394

Jerónimo Carballo

University of Maryland ( email )

Gianmarco I.P. Ottaviano (Contact Author)

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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