Working Paper: NBER ID: w15706
Authors: Jaebin Ahn; Amit K. Khandelwal; Shangjin Wei
Abstract: We provide systematic evidence that intermediaries play an important role in facilitating trade using a firm-level the census of China's exports. Intermediaries account for around 20% of China's exports in 2005. This implies that many firms engage in trade without directly exporting products. We modify a heterogeneous firm model so that firms endogenously select their mode of export - either directly or indirectly through an intermediary. The model predicts that intermediaries will be relatively more important in markets that are more difficult to penetrate. We provide empirical confirmation for this prediction, and generate new facts regarding the activity of intermediaries.
Keywords: intermediaries; trade; China; export; firm-level analysis
JEL Codes: F1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade costs (F19) | use of intermediaries (L14) |
| geographical distance from China (N95) | intermediary export shares (F10) |
| presence of intermediaries (L14) | access to export markets for less productive firms (F14) |