Wholesaler Establishments' Locations and Indirect Trade

Author Name ITO Tadashi (Gakushuin University) / SAITO Yukiko (Senior Fellow, RIETI)
Creation Date/NO. May 2018 18-P-010
Research Project Innovation Enhancing Regional Economic Structure and Evolution of Cities
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This paper presents empirical facts on wholesalers' location pattern of establishments and their roles in manufacturers' indirect trade by using micro data of firms and establishments, and focuses on regional economies. The following are the main findings. Concerning the exporting probability of wholesale establishments, 1) location of their headquarters matters more than location of establishments, 2) size dependency of exporting probability is small in the periphery area, 3) exporting probability is high when there are other exporting establishments within the same firm. Concerning the domestic transaction network between wholesalers and manufacturers, 4) manufacturing firms in periphery regions tend to export indirectly though wholesale firms located remotely in core regions considering headquarter locations while the distance between establishments are from one-third to one-fourth of that between headquarters. The facts on exporting probability of wholesale establishments suggest that information from headquarters and other exporting establishments within the same firm is more important than infrastructures, etc., i.e., physical access from the establishment. Furthermore, the fact on domestic transaction networks suggests that wholesale firms in core regions expand their establishments in periphery regions and create bases for supplier search to reduce search cost.