Exporting costs and multi‐product shipments*

Abstract

AbstractIn 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.