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The Network Structure of International Trade

  • Chaney, Thomas

I build a simple dynamic model of the formation of an international social network of importers and exporters. Firms can only export into markets in which they have a contact. They acquire new contacts both at random, and via their network of existing contacts. This model explains (i) the cross-sectional distribution of the number of foreign markets accessed by individual exporters, (ii) the cross-sectional geographic distribution of foreign contacts, and (iii) the dynamics of firm level exports. I show that the firm level dynamics of trade can explain the observed cross section of firm level exports. All theoretical predictions are supported by the data.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8240.

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Date of creation: Feb 2011
Handle: RePEc:cpr:ceprdp:8240
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