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Title: The Buyer Margins of Firms' Exports

Author(s): Jer�nimo Carballo, Gianmarco Ottaviano and Christian Volpe Martincus

Publication Date: August 2013

Keyword(s): Buyer Margins, Competition, Market Segmentation and Markups

Programme Area(s): International Trade and Regional Economics

Abstract: We use highly disaggregated firm-level export data from Costa Rica, Ecuador, and Uruguay over the period 2005-2008 to provide a precise characterization of firms' export margins, across products, destination countries, and crucially customers. We show that a firm's number of buyers and the distribution of sales across them systematically vary with the characteristics of its destination markets. While most firms serve only very few buyers abroad, the number of buyers and the skewness of sales across them increases with the size and the accessibility of destinations. We develop a simple model of selection with heterogeneous buyers and sellers consistent with these findings in which tougher competition induces a better alignment between consumers' ideal variants and firms' core competencies. This generates an additional channel through which tougher competition leads to higher productivity and higher welfare and hints at an additional source of gains from trade as long as freer trade fosters competition.

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Bibliographic Reference

Carballo, J, Ottaviano, G and Volpe Martincus, C. 2013. 'The Buyer Margins of Firms' Exports'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9584