Working Paper

How Do Firms Organize Trade? Evidence from Ghana

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The literature on firm heterogeneity in international trade posits that only the most productive
firms become exporters (Melitz 2003). However, empirical findings suggest that also firms that
are not highly productive export. This paper investigates empirically how firms organize their
export trade. If selling directly, sunk costs of foreign market entry are arguably very high, so only
productive firms can achieve this (Schroeder et al. 2003). Low productivity firms, by contrast,
may prefer to export through trading companies, which involves lower sunk costs. Using a firm
level panel data set of Ghanaian firms we investigate the relationship between firm productivity
and the use of export intermediaries. Our estimation results take simultaneity problems into
account and reveal that indeed low productivity firms tend to export through intermediaries.


Jens Krüger


Publication Date
JEL Classification
D21, F14, L22