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Intermediation in Foreign Trade: When do Exporters Rely on Intermediaries?

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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.
Original languageEnglish
JournalApplied Economics Quarterly
Pages (from-to)267-288
Publication statusPublished - 2005

    Research areas

  • transaction costs, monopolistic competition, trade intermediation, indirect exports, export channel

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