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Journal article

Two-sided heterogeneity and trade

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.

Andrew B. Bernard, Andreas Moxnes and Karen Helene Ulltveit-Moe

1 July 2018

Review of Economics and Statistics 100(3) , pp.424-439, 2018

DOI: 10.1162/rest_a_00721

This Journal article is published under the centre's Trade programme.