Customs-brokers as facilitators in international trade

Abstract

Recent studies suggest that firms can reduce fixed trade costs by hiring intermediaries like trading companies. I argue that customs brokers – a type of intermediary rarely studied in economics before – can play a similar role. Using panel data of Norwegian trade transactions, I show that such brokers are commonly used to clear goods through customs. I find indications of lower sunk costs as well as fixed trade costs for firms that hire such services. However, engaging brokers can be risky, and traders in high-risk products like food are more likely to self-declare. Results are similar for importing and exporting, indicating that customs brokers facilitate both modes of trade.