A Simple Model of Buyer-Seller Networks in International Trade

Philipp Herkenhoff, Sebastian Krautheim and Philip Sauré

No 9124, CESifo Working Paper Series from CESifo

Abstract: The recent literature on firm-to-firm trade has documented salient empirical regularities of the buyer-seller network. We propose a simplistic re-interpretation of the classical Krugman (1980) model that accounts for surprisingly many of the empirical regularities. This re-interpretation relies on randomized bundling of Krugman-varieties into heterogeneous firms, economically neutral ‘sales units’ that import foreign varieties but belong to local firms, and a statistical reporting threshold that applies to firm-to-firm transactions. We argue that our model provides an important benchmark for the assessment of theoretical models that aim to identify the determinants of firm-to-firm networks.

Keywords: firm-to-firm; buyer-seller; trade; network; random matching (search for similar items in EconPapers)
JEL-codes: F10 F12 F14 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-bec, nep-int and nep-net
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Related works:
Journal Article: A simple model of buyer–seller networks in international trade (2024)
Working Paper: A Simple Model of Buyer-Seller Networks in International Trade (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9124

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