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Abstract
This paper questions whether the overseas expansion of a country's retailers fosters overall
bilateral exports towards these host markets. To address this question, we consider an empirical trade model, where the foreign sales of multinational retailers reduce the fixed and variable trade
costs of their co-national firms towards the same destination markets. We test our model with
data on bilateral exports on a large panel of countries and the foreign sales of world's largest
one hundred retail companies over the 2001-2010 decade. We find a strong positive effect of
the overseas presence of a country's retailers on its exports to those markets. This outcome is
far from being trivial, as most products sold in retailers foreign outlets are locally-produced. It
testifies that the overseas presence of a country's retail companies contributes to the reduction of
trade costs towards these markets for other origin country firms. Our result is robust to different specifications, the use of different sets of instrumental variables and econometric approaches.