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The role of intermediaries in facilitating trade

JaeBin Ahn, Amit Khandelwal and Shang-Jin Wei

Journal of International Economics, 2011, vol. 84, issue 1, 73-85

Abstract: This paper documents that intermediaries play an important role in facilitating international trade. We modify a heterogeneous firm model to allow for an intermediary sector. The model predicts that firms will endogenously select their mode of export - either directly or indirectly through an intermediary - based on productivity. The model also predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for these predictions using the firm-level census of China's trade, and generate new facts regarding the activity of intermediaries. We also provide evidence that firms begin to export directly after exporting through intermediaries.

Keywords: China; Intermediaries; Heterogeneous; firms; Middlemen; Trade; costs (search for similar items in EconPapers)
Date: 2011
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Working Paper: The Role of Intermediaries in Facilitating Trade (2010) Downloads
Working Paper: The Role of Intermediaries in Facilitating Trade (2010) Downloads
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