DP14123 Learning About Demand Abroad From Wholesalers: a B2B Analysis

Author(s): William Connell, Emmanuel Dhyne, Hylke Vandenbussche
Publication Date: November 2019
Date Revised: November 2019
Keyword(s): B2B data, direct and indirect exports, learning about demand
JEL(s): F14
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14123

This paper uses Business to Business (B2B) transaction level data. It shows that manufacturing firms that initially export via a wholesaler are much more likely to become direct exporters to the same destination in subsequent periods. Theoretically, we rationalize this finding by demonstrating how a connection to a wholesaler reduces uncertainty about the foreign demand. In the data we isolate the channel for demand learning from productivity spillovers. Non-exporting manufacturing firms, previously serving a foreign destination through an exporting wholesaler, have a much higher probability of becoming direct exporters to the same export market in subsequent periods. A connection to an exporting wholesaler results in a probability of exporting to the same destination that is six times higher than a comparable firm without any exposure to the foreign destination.