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Peer Effects in Program Participation

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  • Gordon B. Dahl
  • Katrine Vellesen Loken
  • Magne Mogstad

Abstract

When trading, firms choose between different payment contracts. As shown theoretically in Schmidt-Eisenlohr (forthcoming), this allows firms in international trade to optimally trade-off differences in financing costs and enforcement across countries. This paper provides evidence from a large number of countries that shows that country characteristics are indeed central determinants of the payment contract choice. As predicted, the use of open account decreases in financing costs and contract enforcement in the source country. We extend the theory and test two additional predictions. First, we show that the more complex the industry of a firm, the more important is the quality of contract enforcement and the less important are the financing costs for the contract choice. Second, we compare direct and indirect exporters and find evidence that suggests that intermediaries play a relevant role in contract enforcement across borders.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4349.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4349

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Keywords: trade finance; payment contracts; industry complexity; developing countries; trade intermediation;

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References

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Citations

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Cited by:
  1. Johansson, Per & Karimi, Arizo & Nilsson, Peter, 2014. "Gender Differences in Shirking: Monitoring or Social Preferences? Evidence from a Field Experiment," IZA Discussion Papers 8133, Institute for the Study of Labor (IZA).
  2. Leonardo Bursztyn & Florian Ederer & Bruno Ferman & Noam Yuchtman, 2012. "Understanding Peer Effects in Financial Decisions: Evidence from a Field Experiment," NBER Working Papers 18241, National Bureau of Economic Research, Inc.
  3. Aakvik, Arild & Hansen, Frank & Torsvik, Gaute, 2013. "Dynamic Peer Effects in Sales Teams," Working Papers in Economics, University of Bergen, Department of Economics 10/13, University of Bergen, Department of Economics.
  4. Asphjell, Magne K. & Hensvik, Lena & Nilsson, J. Peter, 2013. "Businesses, Buddies, and Babies: Fertility and Social Interactions at Work," Working Paper Series, Center for Labor Studies, Uppsala University, Department of Economics 2013:8, Uppsala University, Department of Economics.
  5. Gordon B. Dahl & Andreas Ravndal Kostol & Magne Mogstad, 2013. "Family Welfare Cultures," NBER Working Papers 19237, National Bureau of Economic Research, Inc.
  6. Ciliberto, Federico & Miller, Amalia & Skyt Nielsen, Helena & Simonsen, Marianne, 2013. "Playing the Fertility Game at Work: An Equilibrium Model of Peer Effects," MPRA Paper 45914, University Library of Munich, Germany.
  7. Albrecht Glitz, 2013. "Coworker Networks in the Labour Market," Working Papers 731, Barcelona Graduate School of Economics.
  8. Liu, Hong & Sun, Qi & Zhao, Zhong, 2013. "Social Learning and Health Insurance Enrollment: Evidence from China's New Cooperative Medical Scheme," IZA Discussion Papers 7251, Institute for the Study of Labor (IZA).
  9. Løken, Katrine V. & Lommerud, Kjell Erik & Reiso, Katrine Holm, 2014. "Single Mothers and their children: Evaluating a work-encouraging welfare reform," Working Papers in Economics, University of Bergen, Department of Economics 04/14, University of Bergen, Department of Economics.
  10. Kummer, Michael E., 2013. "Spillovers in networks of user generated content: Evidence from 23 natural experiments on Wikipedia," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-098, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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