Shipment frequency of exporters and demand uncertainty: An inventory management approach

Fontagné, Lionel, Békés, Gábor, Muraközy, Balázs and Vincent Vicard
Authors registered in the RePEc Author Service: Gábor Békés, Lionel Fontagné and Balazs Murakozy

No 11013, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies how exporting firms optimize their inventory management in order to adapt to the uncertainty stemming from demand volatility. We motivate our analysis with a stochastic inventory management framework. We use monthly micro data on French exporters and find that greater uncertainty is associated with lower sales volume. We decompose this effect to its two margins, the number of shipments and average shipment size to find that the number of shipments decreases more quickly as uncertainty increases which is in line with firms adjusting their inventory policy as well as their exported volume as a result of increased uncertainty. Also, uncertainty was found to matter more at distant markets where the uncertainty between firm actions and the arrival of the products is the largest.

Keywords: Firms; Frequency of trade; Gravity; Inventory model; Transport costs (search for similar items in EconPapers)
JEL-codes: D40 F14 R41 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-int and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Shipment frequency of exporters and demand uncertainty: An inventory management approach (2015)
Working Paper: Shipment frequency of exporters and demand uncertainty: An inventory management approach (2015)
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