Exporting costs and multi-product shipments

The Scandinavian Journal of Economics. 2022. Vol. 124. No. 4. P. 990–1023.

Gomtsyan D., Tarasov A.

In this paper, employing transaction-level data for Russian imports, we explore the role of multi-product shipments in explaining shipping patterns across countries. In our data, an average shipment includes five different products. We document that firms from higher-income countries on average include a larger number of different products into a single shipment and have a larger number of shipments per period with a lower average quantity and value. We then propose a mechanism that reconciles both facts. Specifically, multi-product shipments allow firms to split fixed costs per shipment across many products and, therefore, reduce total shipment costs. As a result, higher-income 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.

Keywords: fixed costs per shipment, asymmetric trade costs