English, Article, Journal or magazine article edition: Information Costs, Networks and Intermediation in International Trade Dimitra Petropoulou

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Information Costs, Networks and Intermediation in International Trade
Author
  • Dimitra Petropoulou
Physical Description
  • preprint
Notes
  • This paper presents a pairwise matching model with two-sided information asymmetry to analyse the impact of information costs on endogenous network building and matching by information intermedairies. The framework innovates by examining the role of information costs on incentives for trade intermediation, thereby endogenising the pattern of direct and indirect trade. Intermediation is shown to unambiguously raise expected trade volume and social welfare by expanding the set of matching technologies available to traders. Moreover, convexity in network-building costs is necessary for both direct and indirect trade to arise in equilibrium while the pattern of trade is shown to depend on the level of information costs as well as the relative effectiveness of direct and indirect matching technologies with changing information costs. The model sheds light on the relationship between information frictions and aggregate trade volume, which may be non-monotonic as a result of conflicting effects of information costs on the incentives for direct and indirect trade.
  • RePEc:oxf:wpaper:370
  • This paper presents a pairwise matching model with two-sided information asymmetry toanalyse the impact of information costs on endogenous network building and matching byinformation intermediaries. The framework innovates by examining the role of informationcosts on incentives for trade intermediation, thereby endogenising the pattern of direct andindirect trade. Intermediation is shown to unambiguously raise expected trade volume andsocial welfare by expanding the set of matching technologies available to traders. Moreover,convexity in network-building costs is necessary for both direct and indirect trade to arise inequilibrium while the pattern of trade is shown to depend on the level of information costs aswell as the relative effectiveness of direct and indirect matching technologies with changinginformation costs. The model sheds light on the relationship between information frictionsand aggregate trade volume, which may be non-monotonic as a result of conflicting effects ofinformation costs on the incentives for direct and indirect trade.
  • International Trade, Pairwise Matching, Information Cost, Intermediation,Networks
  • RePEc:cep:cepdps:dp0848
Language
  • English
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