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Abstract
This paper examines whether ownership arrangements between manufacturers and intermediaries
improve the export performance of the former. We develop a theoretical model of trade with
vertically linked industries whereby upstream manufacturers compete in export markets and may
decide to acquire ownership stakes in an intermediary. The model highlights how more productive
firms succeed in managing the double marginalization problem and in reducing the costs of
exporting through forward acquisition. On the flip side, we find that vertical ownership creates a
market externality among manufacturers due to the reallocation of market shares from small firms
to large firms, forcing some low-productivity firms to exit foreign markets. Predictions from the
model are tested using firm-level data on the French agri-food sector. The results confirm the
model predictions and reveal that the benefits from forward acquisitions could be quite large.