Role of wholesalers and distribution groups in international trade

11-06-2015

In this briefing, we assess the role of intermediaries and wholesalers in international trade based on the existing theory and empirical evidence. In all countries examined, a relevant share of international trade (on average more than 10%) occurs through intermediaries. Especially small and less efficient firms can export thanks to the presence of intermediaries operating on a larger scale and exploiting economies of scale. Intermediaries therefore can increase the amount of exports and the extent of economic integration of a country, especially when there are relevant obstacles to access a foreign market. Many firms in emerging markets have access to foreign markets thanks to the presence of intermediaries. Because of the role played in an increasingly complex global market, wholesalers tend to have a large size and a significant market power. Therefore competition needs to be maintained in this sector, in order for countries to truly benefit from the presence of wholesalers and intermediaries.

In this briefing, we assess the role of intermediaries and wholesalers in international trade based on the existing theory and empirical evidence. In all countries examined, a relevant share of international trade (on average more than 10%) occurs through intermediaries. Especially small and less efficient firms can export thanks to the presence of intermediaries operating on a larger scale and exploiting economies of scale. Intermediaries therefore can increase the amount of exports and the extent of economic integration of a country, especially when there are relevant obstacles to access a foreign market. Many firms in emerging markets have access to foreign markets thanks to the presence of intermediaries. Because of the role played in an increasingly complex global market, wholesalers tend to have a large size and a significant market power. Therefore competition needs to be maintained in this sector, in order for countries to truly benefit from the presence of wholesalers and intermediaries.