Trade relationships during and after a crisis

Alejandra Martinez

Papers from arXiv.org

Abstract: This paper provides causal evidence that temporary supply disruptions reshape firms' relationship portfolios in international trade. Using exogenous road disruptions during Colombia's 2010-11 La Ni\~na episode, I identify exposure at the buyer-seller relationship level, exploiting variation within importers' supplier portfolios. Exposed relationships are less likely to terminate when importers have alternative non-exposed suppliers. However, firms with broader portfolio exposure gradually reduce their relationship networks and may eventually exit the market. A framework linking relationship surplus to portfolio composition explains these contrasting responses and shows how the same shock generates opposite effects at relationship and firm levels.

Date: 2026-01, Revised 2026-05
New Economics Papers: this item is included in nep-dev and nep-iaf
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