We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore depends on the extent that wholesalers are a feature of input supply within an industry. Using firm level data from China, we document that wholesalers play no such role for direct importers. However, other firms experience productivity gains from reducing input tariffs if trade intermediation of foreign inputs within their sector is high. They suffer efficiency losses otherwise. © 2020

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1 September 2020

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Journal of International Economics 1262020

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DOI: 10.1016/j.jinteco.2020.103329

https://www.sciencedirect.com/science/article/abs/pii/S0022199618301636?via%3Dihub

This Journal article is published under the centre's Trade programme.