Learning About Demand Abroad from Wholesalers: A B2B Analysis

49 Pages Posted: 4 Dec 2019

See all articles by William Connell Garcia

William Connell Garcia

KU Leuven - Faculty of Business and Economics (FEB)

Emmanuel Dhyne

National Bank of Belgium

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR

Date Written: November 2019

Abstract

This paper uses Business to Business (B2B) transaction level data. It shows that manufacturing firms that initially export via a wholesaler are much more likely to become direct exporters to the same destination in subsequent periods. Theoretically, we rationalize this finding by demonstrating how a connection to a wholesaler reduces uncertainty about the foreign demand. In the data we isolate the channel for demand learning from productivity spillovers. Non-exporting manufacturing firms, previously serving a foreign destination through an exporting wholesaler, have a much higher probability of becoming direct exporters to the same export market in subsequent periods. A connection to an exporting wholesaler results in a probability of exporting to the same destination that is six times higher than a comparable firm without any exposure to the foreign destination.

Keywords: B2B data, direct and indirect exports, learning about demand

JEL Classification: F14

Suggested Citation

Connell Garcia, William and Dhyne, Emmanuel and Vandenbussche, Hylke, Learning About Demand Abroad from Wholesalers: A B2B Analysis (November 2019). CEPR Discussion Paper No. DP14123. Available at SSRN: https://ssrn.com/abstract=3496612

William Connell Garcia (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Emmanuel Dhyne

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR ( email )

Faculty of Economics
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 326 920 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: https://www.sites.google.com/site/vandenbusschehylke/home-1

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