Two-sided Heterogeneity and Trade

Author Name Andrew B. BERNARD (Tuck School of Business at Dartmouth) / Andreas MOXNES (University of Oslo) / Karen Helene ULLTVEIT-MOE (University of Oslo)
Creation Date/NO. March 2016 16-E-047
Research Project Geospatial Networks and Spillover Effects in Inter-organizational Economic Activities
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This paper develops a multi-country model of international trade that provides a simple micro-foundation for buyer-seller relationships in trade. We explore a rich dataset 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.