Three essays on the economics of traders and agents

Han, Yangjun (2025). Three essays on the economics of traders and agents. University of Birmingham. Ph.D.

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Abstract

This thesis consists of three chapters on traders and agents.

The first chapter analyzes the characteristics of the UK agent market, particularly focusing on their strategic behavior, survival, and growth patterns. The analysis provides several contributions: First, the agents' market structure remains under-explored despite their significant role in handling over 85% of UK export and taking caring of border-related tasks. Our findings reveal a dual market structure, with a small number of dominant agents controlling the majority of the market through expansive operational networks, while numerous smaller agents foster competition by working in their niche markets. Second, qualitative studies fail to capture agents' development and growth. We find that new entrants typically begin with a narrow focus but gradually expand upon survival.

The second chapter studies trader-agent relationships, especially their connection characteristics and dynamics. While the importance of cross-border buyer-seller relationships has been recognized in the literature, the relationships between traders and agents have been largely overlooked. This chapter uses granular UK customs data to document the key features of the trader-agent relationships and provide empirical evidence regarding their dynamics. We find that larger traders generally use multiple agents, while smaller ones have limited connections. Though the relationships are short-lived, those of high value and deep cooperation are more likely to sustain. In addition, we empirically confirm that traders are seeking more established agents in response to the Brexit-induced uncertainty.

The third chapter examines agents within the framework of Mutual Recognition Agreements (MRAs) for trusted traders, which grant them streamlined customs procedures at foreign borders. Despite the widespread use of MRAs, evident in the fact that over 80% of UK exports occur between trade partners with such agreements in place, there is limited understanding of the effectiveness of this trade policy. We find that the majority of firms are indirectly classified as "safe traders" by working with AEO-certified agents. Building on this, we extend the heterogeneous firm model a la Melitz (2003) by incorporating administrative costs and highlighting the role of agents. Using transaction-level UK customs data, we empirically validate our model's predictions, showing that MRAs enhance firms' export participation and increase their export values through the involvement of certified agents.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):