A Search Cost Perspective on Formation and Duration of Trade
| Title: | A Search Cost Perspective on Formation and Duration of Trade |
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| Format: | Journal Article |
| Publication Date: | October 2008 |
| Published In: | Review of International Economics |
| Description: | More than half of all US import relationships begin with less than $10,000 annually. The median relationship is observed to last just one year. The incidence and duration of import relationships are consistent with a search model of international trade. The preponderance of small starting relationships reveals uncertainty present in the formation of trade relationships. Initial size, reliability, and search costs play an important role. Larger initial purchase results in longer relationships. Higher reliability and lower search costs lead to larger initial purchases and longer relationships. |
| Ivan Allen College Contributors: | |
| Citation: | Besedes, Tibor and Thomas J. Prusa, “A Search Cost Perspective on Formation and Duration of Trade,” Review of International Economics (2008), 16(5):835-849 |
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