Abstract
The paper explores the question of why trade intermediaries (TIs) are frequently used as agents for exports to some countries but not to others. First, we adapt a standard intra-industry trade model with variable export costs (e.g. transport) and fixed export costs (e.g. market access) to include a TI that is able to pool market access cost. This framework suggests explanatory factors for the TI share in a country's exports, which are largely in line with the literature. Second, we test these explanatory factors with a new data set based on French customs information. The paper finds that: (i) higher market access costs increase the TI share, (ii) smaller export markets feature a larger TI share, (iii) network effects are important determinants of trade intermediation.
| Translated title of the contribution | Intermediation in Foreign Trade: When do Exporters Rely on Intermediaries? |
|---|---|
| Original language | English |
| Journal | Applied Economics Quarterly |
| Volume | 51 |
| Issue | 3 |
| Pages (from-to) | 267-288 |
| ISSN | 1611-6607 |
| Publication status | Published - 2005 |
Keywords
- transaction costs
- monopolistic competition
- trade intermediation
- indirect exports
- export channel