Costly information and rational inattention by exporters

Silvia Bertarelli ()
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Silvia Bertarelli: Università degli studi di Ferrara

No 425, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

Abstract: In this paper, I present a structural gravity model within a framework that considers the cost of acquiring information. This yields a structural gravity equation that incorporates an additional factor related to export dispersion. Aggregated firm-level data from a large sample of countries provides empirical evidence that dispersion influences bilateral trade flows. Dispersion acts as both a source of information and a risk factor that demands risk premia.

Keywords: Shannon's information theory; prior beliefs; extensive margin of trade (search for similar items in EconPapers)
JEL-codes: D83 F10 F14 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2025-06, Revised 2025-06
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http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0425.pdf Revised version, 2025 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:srt:wpaper:0425

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