Product Differentiation and Duration of US Import Trade

We examine the extent to which product differentiation affects duration of US import trade relationships.  The results are consistent with a matching model of trade formation. Using highly disaggregated product level data we estimate the hazard rate is at least 23% higher for homogeneous goods than for differentiated products. The results are not only highly robust but are often strengthened under alternative specifications.  As the smallest relationships are dropped, differences across product types increase. Controlling for
potential measurement errors also results in larger differences across product types.

• Tibor Besedes

Besedes, Tibor and Prusa, Thomas J., "Product Differentiation and Duration of US Import Trade," Journal of International Economics, 70 vol. 2 (2006):  339-358.

• International Trade

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• School of Economics