Abstract

http://ssrn.com/abstract=1857970
 
 

Citations



 


 



Buyer-Seller Relationships in International Trade: Evidence from U.S. States' Exports and Business-Class Travel


Anca D. Cristea


University of Oregon - Department of Economics

February 1, 2011

Journal of International Economics, Vol. 84, No. 2, 2011

Abstract:     
International trade has become increasingly dependent on the transmission of complex information, often realized via face-to-face communication. This paper provides novel evidence for the importance of in-person business meetings in international trade. Interactions among trade partners entail a fixed cost of trade, but at the same time they generate relationship capital, which adds bilateral specific value to the traded products. Differences in the face-to-face communication intensity of traded goods, bilateral travel costs and foreign market size determine the optimal amount of interaction between trade partners. Using U.S. state level data on international business-class air travel as a measure of in-person business meetings, I find robust evidence that the demand for business-class air travel is directly related to volume and composition of exports in differentiated products. I also find that trade flows in R&D intensive manufactures and goods facing contractual frictions are most dependent on face-to-face meetings. The econometric identification exploits the cross-state variation in bilateral exports and business-class air travelers by foreign country and time period, circumventing any spurious correlation induced by cross-country differences driving aggregate travel and trade patterns.

Keywords: state exports, air travel, fixed export cost, face-to-face communication, relationship intensity

JEL Classification: F1, R4

Accepted Paper Series





Not Available For Download

Date posted: June 5, 2011 ; Last revised: July 27, 2012

Suggested Citation

Cristea, Anca D., Buyer-Seller Relationships in International Trade: Evidence from U.S. States' Exports and Business-Class Travel (February 1, 2011). Journal of International Economics, Vol. 84, No. 2, 2011. Available at SSRN: http://ssrn.com/abstract=1857970

Contact Information

Anca D. Cristea (Contact Author)
University of Oregon - Department of Economics ( email )
1245 University of Oregon
Eugene, OR 97403
United States
Feedback to SSRN


Paper statistics
Abstract Views: 153

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.313 seconds