Search and the Path-Dependency of Trade

Terence Edwards

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: This paper investigates the implications of imperfect information and matching/searching for international trade theory. I develop an illustrative model where firms find such partners by a search through successive matches. The consequences include linking today's import demand patterns to past changes in costs, protection and interest rates. Today's policy decisions will likewise affect future trade. Trade diversion from a preferential trading agreement may well persist as informational diversion well after the preferential agreement has been scrapped. This has important implications for the timing of trade liberalisation.

Keywords: Trade; Protection; Search; Outsourcing. (search for similar items in EconPapers)
JEL-codes: F00 F12 F13 (search for similar items in EconPapers)
Date: 2006-05, Revised 2006-05
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

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