Trade Intermediaries

Why do WHOLESALERS exist in trade models ?

They reduce FIXED EXPORT COSTS by pooling MARKET ACCESS, DOCUMENTATION and NETWORKS.

Direct and Indirect Exporting — Key Difference ?

DIRECT: High Fixed Cost - Low Marginal Cost

INDIRECT: Low Fixed Cost - High Marginal Cost

Firm Heterogeneity in Productivity leads to ENDOGENOUS sorting into: ?

Low Productivity: No Export

Medium Productivity: Intermediary

High Productivity: Direct Export

Why are Intermediary-Exported Goods more expensive ?

Additional Marginal Costs (repackaging, relabeling, handling)

Which markets rely on Intermediaries ?

1. Small GDP

2. High Distance

3. High Tariffs

4. Complex Regulations

Gravity results with Intermediaries show what ?

DISTANCE and SMALL MARKET SIZE increase Intermediary export shares.

Intermediaries and Extensive Margin ?

They expand trade mainly through the Extensive Margin (more firms/products).

Relationship between Intermediary Share and GDP ?

NEGATIVE — Larger Markets rely less on Intermediaries.

How do TRADE BARRIERS affect Intermediate Trade ?

More Documents, Higher Tariffs → Higher Intermediary Share

Why are WHOLESALERS less sensitive to Exchange Rates ?

They operate on WEAKER INTENSIVE MARGINS and absorb shocks via QUANTITIES rather than PRICES.

Empirical pattern of Intermediary Export Share vs Productivity ?

Inverted-U Relationship

Core contribution of Ahn et al. (2011) ?

Embedding intermediaries into a Melitz-type HETEROGENOUS firm model.

Core contribution of Bernard et al. (2010) ?

Manufacturers account for MOST TRADE VALUE, Non-manufacturing firms play a central role in ENABLING FIRM PARTICIPATION in trade as Intermediaries.