IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/18110.html

Frictions and adjustments in firm-to-firm trade

Author

Listed:
  • Fontaine, François
  • Martin, Julien
  • Mejean, Isabelle

Abstract

We study bilateral trade adjustments in a dynamic Ricardian model of trade with search frictions. The model generates an endogenous network of firm-to-firm trade relationships that displays price bargaining within and across firm-to-firm relationships. Following a foreign shock, firms sourcing inputs from abroad have three options: absorb the shock, renegotiate with their current supplier or switch to a supplier in another country. The relative importance of these adjustment margins depends on the interplay between Ricardian comparative advantages, search frictions and firms' individual characteristics, including the history of the relationship. We exploit French firm-to-firm trade data to estimate the model structurally and quantify the relative importance of these adjustment margins in 26 sectors and 14 EU countries.

Suggested Citation

  • Fontaine, François & Martin, Julien & Mejean, Isabelle, 2023. "Frictions and adjustments in firm-to-firm trade," CEPR Discussion Papers 18110, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18110
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP18110
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Irene Iodice & Camille Reverdy & Irene Iodice, 2025. "Protection or Protectionism: The Effect of Technical Regulations on Input Sourcing," CESifo Working Paper Series 11829, CESifo.
    3. Laura Alfaro & Mariya Brussevich & Camelia Minoiu & Andrea F. Presbitero, 2025. "Bank Financing of Global Supply Chains," NBER Working Papers 33754, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:18110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.