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A Search Cost Perspective on Formation and Duration of Trade

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Author Info
Tibor Besedeš
Abstract

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. Copyright © 2008 The Author. Journal compilation © 2008 Blackwell Publishing Ltd.

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File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9396.2008.00752.x
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Publisher Info
Article provided by Blackwell Publishing in its journal Review of International Economics.

Volume (Year): 16 (2008)
Issue (Month): 5 (November)
Pages: 835-849
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Handle: RePEc:bla:reviec:v:16:y:2008:i:5:p:835-849

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  1. Hess, Wolfgang & Persson, Maria, 2009. "Survival and Death in International Trade - Discrete-Time Durations of EU Imports," Working Papers 2009:12, Lund University, Department of Economics. [Downloadable!]
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This page was last updated on 2009-12-19.

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