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Search Frictions in International Goods Markets

Author

Listed:
  • Clémence Lenoir

    (Direction Générale du Trésor)

  • Julien Martin

    (UQAM - Université du Québec à Montréal = University of Québec in Montréal)

  • Isabelle Mejean

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract
This paper studies how frictions in the acquisition of new customers distort the allocation of activities across heterogeneous producers. We add bilateral search frictions in a Ricardian model of trade and use French firm-to-firm trade data to estimate search frictions faced by French exporters in foreign markets. Estimated coefficients display a strong degree of heterogeneity across countries and products that correlates with various proxies for information frictions. Markets with high estimated frictions are shown to display less dispersion in sales between high- and low-productivity firms, a consequence of the distortive impact of frictions. A counterfactual reduction in the level of search frictions significantly improves the efficiency of the selection process by pushing the least productive exporters out of the market while increasing export sales at the top of the productivity distribution.

Suggested Citation

  • Clémence Lenoir & Julien Martin & Isabelle Mejean, 2022. "Search Frictions in International Goods Markets," SciencePo Working papers Main hal-03880110, HAL.
    • Handle: RePEc:hal:spmain:hal-03880110
    DOI: 10.1093/jeea/jvac044
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03880110
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    Cited by:

    1. Krolikowski, Pawel M. & McCallum, Andrew H., 2021. "Goods-market frictions and international trade," Journal of International Economics, Elsevier, vol. 129(C).
    2. Fontanelli, Luca & Guerini, Mattia & Napoletano, Mauro, 2023. "International trade and technological competition in markets with dynamic increasing returns," Journal of Economic Dynamics and Control, Elsevier, vol. 149(C).
    3. Bolatto, Stefano & Grazzi, Marco & Tomasi, Chiara, 2022. "Export modes and firms’ adjustments to exchange rate movements," European Economic Review, Elsevier, vol. 141(C).
    4. Demir, Banu & Fieler, Cecilia & Xu, Daniel Yi & Yang, Kelly Kaili, 2021. "O-Ring Production Networks," CEPR Discussion Papers 15741, C.E.P.R. Discussion Papers.
    5. Clément Mazet-Sonilhac, 2021. "In search of frictions [Les frictions informationnelles dans les marchés du crédit et des biens]," SciencePo Working papers tel-03439354, HAL.
    6. Bertheau, Antoine & Bunzel, Henning & Vejlin, Rune Majlund, 2020. "Employment Reallocation over the Business Cycle: Evidence from Danish Data," IZA Discussion Papers 13681, Institute of Labor Economics (IZA).
    7. Luca Fontanelli, 2023. "Theories of market selection: a survey," LEM Papers Series 2023/22, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    8. Clément Mazet-Sonilhac, 2021. "In search of frictions [Les frictions informationnelles dans les marchés du crédit et des biens]," SciencePo Working papers Main tel-03439354, HAL.

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    More about this item

    Keywords

    Firm-to-firm trade; Search frictions; Ricardian trade model; Structural estimation;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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