Two-Sided Search in International Markets

Jonathan Eaton, David Jinkins, James Tybout and Yi Xu ()

No 29684, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a dynamic model of international business-to-business transactions in which sellers and buyers search for each other, with the probability of a match depending on both individual and aggregate search effort. Fit to customs records on U.S. apparel imports, the model captures key cross-sectional and dynamic features of international buyer-seller relationships. We use the model to make several quantitative inferences. First, we calculate the search costs borne by heterogeneous importers and exporters. Second, we provide a structural interpretation for the life cycles of importers and exporters as they endogenously acquire and lose foreign business partners. Third, we pursue counterfactuals that approximate the phaseout of the Agreement on Textiles and Clothing (the “China shock”) and the IT revolution. Lower search costs can significantly improve consumer welfare, but at the expense of importer profits. On the other hand, an increase in the population of foreign exporters can congest matching to the extent of dampening or even reversing the gains consumers enjoy from access to extra varieties and more retailers.

JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-dge, nep-int and nep-pay
Note: ITI
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Two-sided Search in International Markets (2022)
Working Paper: Two-sided Search in International Markets (2016)
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