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Two-Sided Heterogeneity and Trade

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  • Andrew B. Bernard
  • Andreas Moxnes
  • Karen Helene Ulltveit-Moe

Abstract

Empirical studies of firms within industries consistently report substantial heterogeneity in measures of performance such as size and productivity. This paper explores the consequences of joint heterogeneity on the supply side (sellers) and the demand side (buyers) in international trade using a novel transaction-level dataset from Norway. Domestic exporters as well as foreign importers are explicitly identified in each transaction to every destination. The buyer-seller linked data reveal a number of new stylized facts on the distributions of buyers per exporter and exporters per buyer, the matching among sellers and buyers and the variation of buyer dispersion across destinations. The paper develops a model of trade with heterogeneous importers as well as heterogeneous exporters where matches are subject to a relation-specific fixed cost. The model matches the stylized facts and generates new testable predictions emphasizing the importance of importer heterogeneity in explaining trade patterns.

Suggested Citation

  • Andrew B. Bernard & Andreas Moxnes & Karen Helene Ulltveit-Moe, 2014. "Two-Sided Heterogeneity and Trade," NBER Working Papers 20136, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:20136
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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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