Working Paper: CEPR ID: DP12891
Authors: Andrew B. Bernard; Andreas Moxnes
Abstract: Trade occurs between firms both across borders and within countries, and the vast majority of trade transactions includes at least one large firm with many trading partners. This paper reviews the literature on firm-to-firm connections in trade. A growing body of evidence coming from domestic and international transaction data has established empirical regularities which have inspired the development of new theories emphasizing firm heterogeneity among both buyers and suppliers in production networks. Theoretical work has considered both static and dynamic matching environments in a framework of many-to-many matching. The literature on trade and production networks is at an early stage, and there are a large number of unanswered empirical and theoretical questions.
Keywords: international trade; production networks; offshoring; productivity
JEL Codes: F10; F12; F14; L11; L21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| many-to-many matching in trade networks (C78) | variations in trade flows (F14) |
| large exporters having many buyers (F10) | overall productivity and welfare (O49) |
| higher relationship-specific costs (D23) | dampening of trade flows (F69) |
| fewer connections (Y50) | higher production costs (D24) |
| nature of firm connections (L14) | trade dynamics (F14) |