Working Paper: NBER ID: w5617
Authors: James E. Rauch
Abstract: I propose a network/search view of international trade in differentiated products. I present evidence that supports the view that proximity and common language/colonial ties are more important for differentiated products than for products traded on organized exchanges in matching international buyers and sellers, and that search barriers to trade are higher for differentiated than for homogeneous products. I also discuss alternative explanations for the findings.
Keywords: International Trade; Networks; Markets; Differentiated Products; Gravity Model
JEL Codes: F10; F12; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| proximity + common language/colonial ties (F54) | increased trade volumes for differentiated products (F12) |
| search costs (D23) | barriers to trade for differentiated products (F12) |
| differentiated products (L15) | less frequently traded than homogeneous products (F12) |