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Intermediaries in Entrepôt Trade: Hong Kong Re‐Exports of Chinese Goods

Robert Feenstra and Gordon Hanson

Journal of Economics & Management Strategy, 2004, vol. 13, issue 1, 3-35

Abstract: In this paper, we examine Hong Kong's role in intermediating trade between China and the rest of the world. Hong Kong traders distribute a large fraction of China's exports. Net of customs, insurance, and freight charges, re‐exports of Chinese goods are much more expensive when they leave Hong Kong than when they enter. Hong Kong markups on re‐exports of Chinese goods are higher for differentiated products, products with higher variance in export prices, and products sent to China for further processing. These results are consistent with the view that traders resolve informational problems in exchange. Additional results suggest that traders price discriminate across destination markets and use transfer pricing to shift income from high‐tax countries to Hong Kong.

Date: 2004
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Citations: View citations in EconPapers (160)

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https://doi.org/10.1111/j.1430-9134.2004.00002.x

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