Intermediation in foreign trade

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 in both theoretical and empirical terms. 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. From this framework explanatory factors for the TI share in a country's exports are derived and subsequently tested 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." (Author's abstract, IAB-Doku) ((en))

Cite article

Schröder, P., Trabold, H. & Trübswetter, P. (2005): Intermediation in foreign trade. When do exporters rely on intermediates? In: Applied economics quarterly, Vol. 51, No. 3, p. 267-288.