Learning about demand abroad from wholesalers: a B2B analysis
Working Paper N° 377
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 rationalise 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.