Learning and the Value of Relationships in International Trade
Ryan Monarch and
Tim Schmidt-Eisenlohr ()
No 5724, CESifo Working Paper Series from CESifo Group Munich
How valuable are long-term supplier relationships? To address this question, this paper explores relationships between U.S. importers and their suppliers abroad. We first establish several facts: almost half of U.S. imports are in relationships three years or older, relationship survival and traded quantity increase as a relationship ages, and long-term relationships were more resilient in the 2008/9 financial crisis. Based on these findings, we present a model of importer learning and calibrate it using our data. We estimate large differences in the value of relationships across countries. Counterfactuals show that relationships are central to trade flows following external shocks.
Keywords: international trade; firm relationships; learning; institutions (search for similar items in EconPapers)
JEL-codes: F11 F14 L14 D22 (search for similar items in EconPapers)
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Working Paper: Learning and the Value of Relationships in International Trade (2016)
Working Paper: Learning and the Value of Relationships in International Trade (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5724
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