Tools of the trade: trade flexibility with respect to margins and buyers
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Tools of the trade: trade flexibility with respect to margins and buyers Frank Asche1,2 · Atle Oglend2 · Hans-Martin Straume3 Received: 25 July 2019 / Accepted: 31 July 2020 © The Author(s) 2020
Abstract Access to highly disaggregated trade data allows for a more nuanced investigation of different margins of trade, and the factors known to influence them. In this paper, the number of importers and shipments to each importer is investigated together with the more traditional margins. Potential explanatory factors of these trade margins are combined from three literature strands in addition to the standard gravity variables; firm productivity, per-unit shipment costs and country-specific trade costs. The empirical results show, not unexpectedly, that insights from all these different strands of literature influence trade margins significantly. In particular, the number of shipments per importer increases with distance, degree of remoteness and per-shipment cost, and the number of importers decreases with the distance, remoteness and per-unit shipping cost. This indicates that increased trade costs make exporters economize in existing networks. Finally, disaggregating the data into three main product categories using Rauch’s classification, trade patterns are shown to vary by product group. Keywords Trade costs · Exporting · Margins of trade · Transaction data · Heterogeneous firms JEL Classification F10 · F14 · L11
Electronic supplementary material The online version of this article (https://doi.org/10.1007/s00181-02 0-01923-2) contains supplementary material, which is available to authorized users.
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Hans-Martin Straume [email protected]
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Institute for Sustainable Food Systems and School of Forestry Resources and Conservation, University of Florida, Gainesville, USA
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Department of Industrial Economics, University of Stavanger, Stavanger, Norway
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Department of Economics, BI Norwegian Business School, Bergen, Norway
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1 Introduction Countries do not trade, firms trade (Hallak and Levinsohn 2004). Aggregate trade flows are determined by the decisions of a number of individual firms with respect to how they organize their activities at the export as well as import side. Few firms export, and those who engage in exporting activities typically sell a few products to a limited number of markets (Bernard et al. 2007; Mayer and Ottaviano 2008; Bernard et al. 2012). There is a rapidly expanding literature on the role of heterogeneous firms in the trade literature. Due to data availability, most studies focus on exporter (seller) heterogeneity, and few studies accounts for the role of individual importers (buyers). While many researchers have access to firm-level data at the exporter-product-destination country level, few datasets exist for the exporting–importing-product-destination country level. In this paper, we have access to a unique exporter-importer-product-destination country-level data for all mainland Norwegian exports, which will be used to investigate two main objectives.
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