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Information costs, networks and intermediation in international trade
Content Provider | Library of Congress - Books/Printed Material |
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Author | Petropoulou, Dimitra. |
Temporal Coverage | 2008 |
Copyright Year | 2008 |
Abstract | This paper presents a pairwise matching model with two-sided information asymmetry to analyse the impact of information costs on endogenous network building and matching by information intermediaries. The framework innovates by examining the role of information costs on incentives for trade intermediation, thereby endogenising the pattern of direct and indirect trade. Intermediation is shown to unambiguously raise expected trade volume and social welfare by expanding the set of matching technologies available to traders. Moreover, convexity in network-building costs is necessary for both direct and indirect trade to arise in equilibrium while the pattern of trade is shown to depend on the level of information costs as well as the relative effectiveness of direct and indirect matching technologies with changing information costs. The model sheds light on the relationship between information frictions and aggregate trade volume, which may be non-monotonic as a result of conflicting effects of information costs on the incentives for direct and indirect trade. |
Language | English |
Publisher | Centre for Economic Performance, London School of Economics and Political Science |
Publisher Place | London |
Part of Series | Catalog |
Requires | HTML5 supported browser |
Access Restriction | Open |
Subject Keyword | Information Cost Intermediation International Trade Networks Pairwise Matching |
Subject Domain (in LCSH) | International trade ; |
Subject Domain (in LCSH) | Pairwise matching ; |
Subject Domain (in LCSH) | Information cost ; |
Subject Domain (in LCSH) | Intermediation ; |
Subject Domain (in LCSH) | Networks |
Subject Domain (in LCC) | HC10 |
Content Type | Text |
Resource Type | Book |