Working paper

Trade Intermediation by Producers

Aksel Erbahar, and Vincent Rebeyrol

Abstract

This paper shows that Turkish manufacturing exporters export goods that they have not pro-duced and thus also act as trade intermediaries. This exporting of “sourced” products is ubiquitous across firms, products, and destinations. Beyond these facts, the main contribution of the paper is to show that sourced exports are more sensitive to gravity determinants than produced exports at the aggregate level, but at the firm level, this relationship is reversed. We rationalize these findings by allowing producers to act as intermediaries in a model where profitability at the product-destination level is stochastic and correlated across markets. We provide empirical evidence for the model’s core mechanism.

Keywords

international trade; intermediaries; carry-along trade; multi-product firms;

JEL codes

  • F12: Models of Trade with Imperfect Competition and Scale Economies • Fragmentation
  • F14: Empirical Studies of Trade
  • L2: Firm Objectives, Organization, and Behavior

Reference

Aksel Erbahar, and Vincent Rebeyrol, Trade Intermediation by Producers, TSE Working Paper, n. 21-1265, November 2021.

See also

Published in

TSE Working Paper, n. 21-1265, November 2021