Essays in International Trade and Economic Geography

Abstract

This dissertation consists of three essays in the field of international trade and economic geography. The first essay develops a “market access” approach in an inter-regional trade framework to study the distribution of firm productivity and production in a network of geographic locations. We distinguish between two competing effects of trade cost changes, namely import competition and export access, and derive consumer market access (CMA) and firm market access (FMA) measures respectively to capture each effect. This approach allows us to investigate the effect of trade cost changes in general equilibrium, taking into account inter-location spillovers. Motivated by the prominence of intermediated trade and its welfare and policy implications, essays 2 and 3 both examine the role of intermediaries in facilitating international trade. The second essay extends the Melitz (2003) framework to include an intermediated trade technology and foreign demand uncertainty. In this framework, new exporters face idiosyncratic demand uncertainty and intermediated trade serves as a low cost method of testing foreign demand. The third essays studies the relation between exporters' financial health and their mode of exporting. This essay posits that intermediated trade reduces the financing requirement for exporting by lowering the up-front fixed costs and allowing the producers to get paid sooner. Using firm-level data from China, I document that exporters with poor financial health rely disproportionally on trade intermediaries to access foreign markets.