A Search Cost Perspective on Duration of Trade

48 Pages Posted: 2 Feb 2005

See all articles by Tibor Besedes

Tibor Besedes

Georgia Institute of Technology

Date Written: May 2006

Abstract

More than half of all US import relationships begin with less than $10,000 annually. The median relationship is observed to last just one year. The incidence and duration of these relationships are consistent with a matching model of international trade. The preponderance of small starting relationships reveals uncertainty present in formation of trade relationships. Initial size, reliability, and search costs matter and play an important role. Larger initial purchase results in longer relationships. Higher reliability and lower search costs lead to larger initial purchases and longer relationships.

Keywords: Search Costs, Duration, International Trade

JEL Classification: F14, C41

Suggested Citation

Besedes, Tibor, A Search Cost Perspective on Duration of Trade (May 2006). Available at SSRN: https://ssrn.com/abstract=659081 or http://dx.doi.org/10.2139/ssrn.659081

Tibor Besedes (Contact Author)

Georgia Institute of Technology ( email )

221 Bobby Dodd Way
Atlanta, GA 30332-0615
United States

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