Publication Type
Working Paper
Version
Publisher’s Version
Publication Date
10-2023
Abstract
Using a unique dataset that links the production and sales of Chinese exporting firms, we document that the value of export goods a firm produces often differs from the value of export goods that the firm sells in foreign markets. We show that this empirical pattern reflects that some exporters act as trade intermediaries, which we refer to as producer intermediaries. We further show that firms with higher accumulated marketing expenditures are more likely to become producer intermediaries. To understand the implications of our empirical findings, we develop a theoretical framework in which firms can lend and borrow customer capital through outsourcing. Firms with high foreign-customer capital can facilitate trade by outsourcing their export demand to productive firms with limited customer capital, even when frictions prevent optimal outsourcing. Our estimated model indicates that gains from outsourcing can be substantial, with producer intermediaries generating a large portion of these gains.
Keywords
Customer Capital, Trade Intermediaries, Productivity, Trade Cost
Discipline
Econometrics
Research Areas
Econometrics
First Page
1
Last Page
51
Embargo Period
12-13-2020
Citation
Lee, Jungho and XU, Jianhuan.
Customer capital and trade intermediaries: Evidence from China. (2023). 1-51.
Available at: https://ink.library.smu.edu.sg/soe_research/2421
Copyright Owner and License
Author
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.