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Bilateral Economies of Scope

Author

Listed:
  • Yao Amber Li
  • Sichuang Xu
  • Stephen Yeaple
  • Tengyu Zhao

Abstract

International transactions are costly because they require investments in logistics, contracts, and the acquisition of local institutional knowledge. We posit that a portion of the fixed costs of entering a specific export market can be used toward costs of acquiring imports from that same market, and vice versa. Using dis-aggregated transactions data for Chinese firms from 2000 to 2015, we document firm-level trading patterns that suggest such market-specific bilateral economies of scope. Using a structural model, we estimate that the simultaneous export and import in a given country reduces export and import fixed costs by over 41 and 37 percent, respectively.

Suggested Citation

  • Yao Amber Li & Sichuang Xu & Stephen Yeaple & Tengyu Zhao, 2024. "Bilateral Economies of Scope," NBER Working Papers 32803, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32803
    Note: ITI
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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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