Shipment frequency of exporters and demand uncertainty

Gábor Békés, Lionel Fontagné, Balazs Murakozy and Vincent Vicard

Review of World Economics (Weltwirtschaftliches Archiv), 2017, vol. 153, issue 4, No 9, 779-807

Abstract: Abstract This paper examines how exporting firms adapt to the uncertainty stemming from demand volatility. By using monthly customs data from France, we decompose exports into different extensive and intensive margins including two novel margins: the number of months the firms exported (frequency) and the average export value per month. We establish four empirical patterns. First, firms export less to markets with higher demand volatility. Second, this effect is mainly explained by the frequency margin. Third, volatility affects the frequency margin through two channels: indirectly through lower trade volume and directly through logistics re-optimization. In particular, our results suggest that firms send less frequent, larger shipments to more uncertain markets conditional on total exports. Fourth, the effect of demand volatility is magnified on markets with longer time-to-ship. We propose that these observations are in line with simple stochastic inventory management approaches.

Keywords: Gravity; Transport costs; Frequency of trade; Inventory model; Firms (search for similar items in EconPapers)
JEL-codes: D40 F14 R41 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (23)

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Related works:
Working Paper: Shipment frequency of exporters and demand uncertainty (2017)
Working Paper: Shipment frequency of exporters and demand uncertainty (2017)
Working Paper: Shipment frequency of exporters and demand uncertainty (2017)
Working Paper: Shipment frequency of exporters and demand uncertainty (2014)
Working Paper: Shipment Frequency of Exporters and Demand Uncertainty (2014)
Working Paper: Shipment Frequency of Exporters and Demand Uncertainty (2014)
Working Paper: Shipment Frequency of Exporters and Demand Uncertainty (2014)
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DOI: 10.1007/s10290-017-0286-0

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