Entrepreneurship in International Trade
AbstractMotivated by evidence on the importance of incomplete information and networks in international trade, we investigate the supply of 'network intermediation.' We hypothesize that the agents who become international trade intermediaries first accumulate networks of foreign contacts while working as employees in production or sales, then become entrepreneurs who sell access to and use of the networks they accumulated. We report supportive results regarding this hypothesis from a pilot survey of international trade intermediaries. We then build a simple general-equilibrium model of this type of entrepreneurship, and use it for comparative statics and welfare analysis. One welfare conclusion is that intermediaries may have inadequate incentives to maintain or expand their networks, suggesting a rationale for the policies followed by some countries to encourage large-scale trading companies that imitate the Japanese sogo shosha.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8708.
Date of creation: Jan 2002
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Other versions of this item:
- Rauch, J E & Watson, Joel, 2001. "Entrepreneurship in International Trade," University of California at San Diego, Economics Working Paper Series qt1qx2x540, Department of Economics, UC San Diego.
- F20 - International Economics - - International Factor Movements and International Business - - - General
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-01-22 (All new papers)
- NEP-ENT-2002-01-05 (Entrepreneurship)
- NEP-MIC-2002-01-22 (Microeconomics)
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- T. Huw Edwards, 2006. "Search and the Path-Dependency of Trade," Discussion Paper Series 2006_12, Department of Economics, Loughborough University, revised May 2006.
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