Abstract not found

In international trade models, it is typically assumed that manufacturers ship their goods directly to their foreign customers. In reality, however, many manufacturers call in trade intermediaries to perform this task for them. Which manufacturers make use of this option? Theory suggests that it is mostly the small firms which are not profitable enough to cover the high fixed costs of building an own distribution network abroad. Large and efficient firms, on the contrary, prefer to export their goods directly. The present paper brings this hypothesis to a test. Using survey data from the World Bank Enterprise Survey conducted in Turkey in 2008, it shows that there is indeed a negative correlation between firm size and the relative importance of intermediated exports. This result is highly robust to the inclusion of a variety of controls, different estimation methods, and different measures of firm size.

How do parties engaged in international trade ensure adherence to contracts when contract enforcement is weak? In a dynamic general equilibrium model of matching and repeated interaction, I argue that reputational concern can provide a substitute for formal contract enforcement if the threat of exclusion by the current and potential future partners is effective. However, if trade is infrequent or information of past behavior disseminates poorly trade is constrained. In such a case, a bank can provide guarantees- letters of credit- for multiple importers. The bank’s additional credibility is endogenously derived from increasing returns to credibility in size.

Abstract The New Trade Theory predicts that international trade lowers prices for consumers and raises the choices available to them. This study shows that both predictions may no longer hold once adjustments in retailing are taken into account. We present a new model of retailing in general equilibrium and establish a trade-off between the number of products stocked and the number of retail outlets. The results demonstrate that international trade can lead to higher consumer prices if the retail market is relatively less competitive, and that retail assortments do not rise if consumers have a sufficiently low preference for diversity. Keywords: International Trade, Retailing, Diversity, Market Structure, Welfare, Monopolistic Competition. JEL Classification: F12, L11, L81 * I gratefully acknowledge research support from the German Science Foundation (DFG grant number EC 216/5-1). Thanks also to Jim Anderson, Beata Javorcik, James Markusen, J. Peter Neary, Volker Nocke, Michael Pflüger, Horst Raff, and Michael Rauscher for helpful comments and discussions. A previous version of this paper circulated with the subtitle "Diversity versus Accessibility and the Creation of 'Retail Deserts'" and was presented at various conferences and seminars.

We argue that trade in intermediate inputs, or “global production sharing, ” is a potentially important explanation for the increase in the wage gap between skilled and unskilled workers in the U.S. and elsewhere. Using a simple model of heterogeneous activities within an industry, we show that trade in inputs has much the same impact on labor demand as does skill-biased technical change: both of these will shift demand away from low-skilled activities, while raising relative demand and wages of the higher skilled. Thus, distinguishing whether the change in wages is due to international trade, or technological change, is fundamentally an empirical rather than a theoretical question. We review three empirical methods that have been used to estimate the effects of trade in intermediate inputs and technological change on wages, and summarize the evidence for the U.S. and other countries.

The theory of international trade has paid scant attention to market institutions. Neither neoclassical theory nor new trade models typically specify the process by which supply and demand meet. Yet in the real world, intermediaries play a central role in materializing the gains from exchange outlined by standard trade theories. In Antràs and Costinot (2010), we have developed a stylized but explicit model of intermediation in trade. In this short paper, we present a variant of this model that illustrates the potential role of intermediaries in facilitating the realization of the gains from trade.

(6550 words) The paper explores theoretically and empirically why trade intermediaries (TIs) are frequently used as agents for exports to some countries but not to others. 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) the TI share is independent from variable (distance-dependent) export costs. Key Words: trade intermediation, indirect exports, transaction costs, monopolistic competition.

views expressed in this paper are solely those of the authors, and are not meant to represent in any way the views of the institutions with which they are affiliated. The authors thank helpful suggestions

China's reported exports to the United States have long been smaller than U.S.-reported imports from China. Earlier explanations for this focused on re-exports through Hong Kong, and appeared to account for most of the difference. Now, even after taking Hong Kong into account properly, there has emerged a new and growing discrepancy which amounted in 2005 to $46 billion, perhaps 20 percent of the "true " value. Comparisons of detailed customs records from China, Hong, Kong, and the United States shows that direct exports from Chinese ports and Chinese exports through third countries account for much of the discrepancy, relative to trade flows involving Hong Kong. The extent of the problem varies markedly across sectors. Some robust correlates for the discrepancy relate to valuation issues, U.S. tariffs, and re-exporting through the United States itself. The estimated behavior of other potentially important influences is sensitive to the econometric specification employed.

Notes: Center discussion papers are preliminary materials circulated to stimulate discussion and critical comments. We owe many valuable comments to Kyle Bagwell, Jagdish Bhagwati, Alan Deardorff,