EconPapers    
Economics at your fingertips  
 

Pecking Order and Core-Periphery in International Trade

K De Bruyne, Glenn Magerman () and Jan Van Hove

No 2019-06, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: This paper analyzes the impact of market size and trade costs on bilateral trade flows. A multi-country trade model with firm-level heterogeneity in productivities and countries’market potential provides a simple micro foundation for the link between these variables. In the model, market size and trade costs jointly determine a country-specific pecking order of exporters serving their destination countries. In a hypothetical setting where bilateral trade costs are homogeneous across country pairs, market size then implies a common ranking of exporters among destination countries. This leads to a unique core-periphery structure of the world trade network. Relaxing the assumption of homogeneous trade costs, we illustratethe impact of market size and trade costs on bilateral trade flows and its margins in a simple gravity-like setting. Using an instrumental variables approach, we find that both market size and trade costs (measured through the network position of countries) have a significant impact on bilateral exports: countries in the core bilaterally trade more with other countries in the core than with peripheral countries, conditional on typical observables.

Keywords: D85; F1; L1. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2019-01
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/2809 ... _VANHOVE-pecking.pdf Œuvre complète ou partie de l'œuvre (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eca:wpaper:2013/280986

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/280986

Access Statistics for this paper

More papers in Working Papers ECARES from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().

 
Page updated 2019-11-09
Handle: RePEc:eca:wpaper:2013/280986