Two-sided Heterogeneity and Trade

Andrew Bernard, Andreas Moxnes Karen Helene Ulltveit-Moe

Photo: The Review of Economics and Statistics

Published in:

The Review of Economics and Statistics, Volume 100, Issue 3, July 2018.

DOI: 10.1162/rest_a_00721

Abstract

This paper develops a multicountry model of international trade that provides a simple microfoundation for buyer-seller relationships in trade. We explore a rich data set that identifies buyers and sellers in trade and establish a set of basic facts that guide the development of the theoretical model. We use predictions of the model to examine the role of buyer heterogeneity in a market for firm-level adjustments to trade shocks, as well as to quantitatively evaluate how firms’ marginal costs depend on access to suppliers in foreign markets.

 

 

Published Oct. 8, 2018 12:59 PM - Last modified Oct. 8, 2018 12:59 PM