Exporting Costs and Multi-Product Shipments

In this paper, employing transaction level data for Russian imports, we explore the role of multi-product shipments in explaining shipping patterns across countries. First, we document that firms from more developed countries on average include a higher number of different products into a single shipment. We then show that such multiproduct shipments can potentially explain why more developed countries tend to have a higher number of shipments per period with a lower average quantity and value. According to our proposed mechanism, multi-product shipments allow firms to split fixed costs per shipment across many products and, therefore, reduce total shipment costs. As a result, more developed countries tend to have lower fixed costs per shipment. Finally, we construct a simple partial equilibrium model that enables us to quantify the potential increases in trade volumes and welfare created by the multi-product shipment option.