Modes of Exports by Sub-Saharan African Firms: Intensive Margins and Interdependencies

Abstract

This paper examines the interdependencies between direct mode and indirect mode exporters and their effect on the intensive margins of both groups of firms. We do so by first developing an oligopolistic model of trade in which both types of exporters co-exist. We then use firm-level data from a number of Sub-Saharan African countries to empirically test some of our theoretical predictions on the relationships between the intensive margins on one hand and on own- and cross-efficiency levels, degree of competition, and fiscal policies. We also allow for the government policies to be endogenous in both our theoretical and empirical analysis.

Keywords: Mode of exports, Direct exports, Indirect exports, Efficiency in production, Degree of competition, Export subsidy

JEL Classification: F12, F14, O24