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Abstract:

cover
CEP Discussion Paper
Two-sided heterogeneity and Trade
Andrew B. Bernard, Andreas Moxnes and Karen Helene Ulltveit-Moe
April 2016
Paper No' CEPDP1426:
Full Paper (pdf)

JEL Classification: F10; F12; F14


Tags: heterogeneous firms; exporters; importers; sourcing costs; trade elasticity

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.