{
  "title": "Distribution Costs",
  "publication": "IMF Working Papers, January 14, 2022",
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  "summary": "We provide the first direct estimates of distribution expenses incurred by manufacturing plants and assess their importance for aggregate output.",
  "sections": [
    {
      "heading": "Key empirical findings",
      "content": "- Distribution expenses are large: they amount to over half of labor costs.\n- Size-related heterogeneity in distribution shares: plants in the largest decile – relative to the smallest – spend over three times as much on distribution as a share of sales.\n- Time trend (2000–2010): distribution costs as a share of sales declined by one third between 2000 and 2010.\n- From 2000 to 2010, India saw an increase in intranational trade hand in hand with a decrease in the distribution share."
    },
    {
      "heading": "Model and methodological approach",
      "content": "- Developed a model of heterogeneous manufacturing firms that rely on the distribution sector to sell their goods across space.\n- Model calibrated/quantified using:\n  - Facts on size and systematic heterogeneity in distribution shares.\n  - Newly constructed estimates of intranational trade."
    },
    {
      "heading": "Quantitative impacts and welfare implications",
      "content": "- Accounting for firm heterogeneity in distribution requirements amplifies welfare losses from low TFP in the distribution sector by 1.5-fold.\n- Combined empirical trends and model calibration imply large decreases in both variable and fixed costs of distribution from 2000 to 2010.\n- Estimated welfare gains of 58% over this ten year period."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Consumption, Economic sectors, Manufacturing, National accounts, Production, Productivity, Total factor productivity\n- Keywords: aggregate productivity, Consumption, Distribution, distribution expense, distribution sector, distribution share, Labor costs, Manufacturing, Productivity, share of sales, Total factor productivity, transportation costs, welfare loss\n\nSource: IMF Working Paper \"Distribution Costs\" by Cian Ruane and Alessandra Peter, January 14, 2022.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/01/14/distribution-costs-510845"
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    "Authors: Cian Ruane, Alessandra Peter",
    "Published: January 14, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781616355036.001",
    "Distribution expenses are large: they amount to over half of labor costs.",
    "Size-related heterogeneity in distribution shares: plants in the largest decile – relative to the smallest – spend over three times as much on distribution as a share of sales.",
    "Time trend (2000–2010): distribution costs as a share of sales declined by one third between 2000 and 2010.",
    "From 2000 to 2010, India saw an increase in intranational trade hand in hand with a decrease in the distribution share.",
    "Developed a model of heterogeneous manufacturing firms that rely on the distribution sector to sell their goods across space.",
    "Model calibrated/quantified using:",
    "Accounting for firm heterogeneity in distribution requirements amplifies welfare losses from low TFP in the distribution sector by 1.5-fold.",
    "Combined empirical trends and model calibration imply large decreases in both variable and fixed costs of distribution from 2000 to 2010.",
    "Estimated welfare gains of 58% over this ten year period.",
    "Subject: Consumption, Economic sectors, Manufacturing, National accounts, Production, Productivity, Total factor productivity",
    "Keywords: aggregate productivity, Consumption, Distribution, distribution expense, distribution sector, distribution share, Labor costs, Manufacturing, Productivity, share of sales, Total factor productivity, transportation costs, welfare loss",
    "**Working Paper**"
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