How Firms Export: An Assignment Theory of Export Organization

Abstract

This paper develops a model in which direct exporters, indirect exporters, pure intermediaries, and hybrid exporters emerge endogenously from the assignment of products to export platforms. Firms differ in manufacturing and commercial capabilities. Manufacturing capability determines a product's potential profitability, while commercial capability determines how effectively a platform can sell it abroad. Manufacturing activation and product assignments are jointly determined, subject to fixed manufacturing costs, contracting frictions, and increasing organizational costs. Complementarity between manufacturing and commercial capabilities generates positive assortative matching, while organizational diseconomies shape platform scope. Equilibrium allocations can feature manufacturers exporting through their own platforms or those of other firms, specialized intermediaries exporting products they do not manufacture, and hybrid firms exporting their own products alongside those manufactured by other firms. The model characterizes how contracting costs, foreign-market attractiveness, and organizational diseconomies affect equilibrium assignments.