Working Paper: NBER ID: w24556
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: No keywords provided
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 |
|---|---|
| network structure of production (L23) | firms' marginal costs (D21) |
| firms' marginal costs (D21) | firms' productivity (D22) |
| reductions in trade costs (F12) | expanded networks (D85) |
| expanded networks (D85) | improved firm performance (L25) |
| high relationship-specific costs (L14) | lower trade flows (F19) |
| lower trade flows (F19) | lower real incomes (E25) |
| firms managing information frictions (D82) | thrive in international markets (F19) |