Inventory Control and Intermediation in Global Supply Chains

Horst Raff, Zhan Qu and Nicolas Schmitt

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: The paper develops a simple theoretical model of inventory control in global value chains. It identifies a role for intermediaries in managing inventory, and shows that inserting an intermediary as an additional link in a value chain is profitable when demand volatility is high. It also provides conditions under which the intermediary handling inventory is located in the exporting versus the importing country. Trade liberalization in the form of less lumpy trade is shown to expand the role of export and import intermediaries but to have potentially negative effects on the volume of international trade and social welfare in the importing country.

JEL-codes: F12 F23 L22 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-int
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https://www.econstor.eu/bitstream/10419/112984/1/VfS_2015_pid_206.pdf (application/pdf)

Related works:
Working Paper: Inventory Control and Intermediation in Global Supply Chains (2015)
Working Paper: Inventory control and intermediation in global supply chains (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112984

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