Bilateral Economies of Scope

Yao Li, Sichuang Xu, Stephen Yeaple and Tengyu Zhao

No 32803, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: International transactions are costly because they require investments in logistics, contracts, and the acquisition of local institutional knowledge. We posit that a portion of the fixed costs of entering a specific export market can be used toward costs of acquiring imports from that same market, and vice versa. Using dis-aggregated transactions data for Chinese firms from 2000 to 2015, we document firm-level trading patterns that suggest such market-specific bilateral economies of scope. Using a structural model, we estimate that the simultaneous export and import in a given country reduces export and import fixed costs by over 41 and 37 percent, respectively.

JEL-codes: F1 F12 F14 F15 (search for similar items in EconPapers)
Date: 2024-08
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