The Network Structure of International Trade
American Economic Review · 2014 · Volume 104 · Issue 11
Abstract
Motivated by empirical evidence I uncover on the dynamics of French firms exports, I offer a novel theory of trade frictions. Firms only export into markets where they have a contact. They directly search for new trading partners, but also use their existing network of contacts to remotely search for new partners. I characterize the dynamic formation of an international network of exporters in this model. I structurally estimate this model on French data and confirm its predictions regarding the distribution of the number of foreign markets accessed by exporters and the geographic distribution of exports.
Keywords
Network Formation and Analysis: Theory, Neoclassical Models of Trade, Empirical Studies of Trade, Contracting Out, Joint Ventures, Technology Licensing
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