Trade Adjustment Costs in Developing Countries: - World Bank ...

Openness and Export Dynamics: New research directions 291They find, inter alia, that ‘in virtually every Chilean exporter–Colombianimporter pair, at least one of the parties is a large international trader (2009,abstract).’ They go on to develop a theoretical model that explains firms’ choicesof intermediation technology, emphasizing the importance of the volume of theshipment as a determinant. Large sellers do not need to use intermediaries; rather,buyers find them. But small sellers do best to use trading firms to achieve visibility.Finally, Drozd and Nosal (2009) develop a dynamic general equilibrium modelin which exporters invest in building customer relationships abroad. Once amatch is made, the terms of the sale are determined by a bargaining game, so differentprices emerge for the same product in different countries or at differentpoints in time. Among other things, the model provides a new interpretation forobserved patterns of pricing to market.James Tybout is a Professor in the Department of Economics at PennsylvaniaState University.REFERENCESArkolakis, Costas (2008a). Market Access Costs and the New Consumers Margin in InternationalTrade, Working Paper, Department of Economics, Yale University—(2008b). A Unified Theory of Firm Selection and Growth, Working Paper, Department ofEconomics, Yale UniversityAtkeson, Andrew and Ariel Burstein (forthcoming). Innovation, Firm Dynamics and InternationalTrade, Journal of Political Economy.Baldwin, Richard E and Paul R Krugman (1989). Persistent Trade Effects of Large ExchangeRate Changes. Quarterly Journal of Economics, 104: 635–54Bernard, Andrew, Stephen Redding and Peter Schott (2010). Multi-product Firms and ProductSwitching, American Economic Review 100(1): 70-97.Bernard, Andrew B, Eaton, Jonathan, Bradford Jensen, J and Samuel Kortum (2003). Plantsand Productivity in International Trade. American Economic Review, 93: 1268–90Besedes, Tibor and Thomas J. Prusa. (2006). Ins, Outs, and the Duration of Trade, CanadianJournal of Economics 39(1): 266–95Blum, Bernardo, Sebastian Claro and Ignatious Horstmann (2009). Intermediation and theNature of Trade: Theory and Evidence, Working paper, Rotman School of Management,University of Toronto.Bustos, Paula (2007). Multilateral Trade Liberalization, Exports and Technology Upgrading:Evidence on the Impact of MERCOSUR on Argentinean Firms, mimeoConstantini, James A and Marc J Melitz (2008). The Dynamics of Firm-level Adjustment toTrade Liberalizations, in Elhanan Helpman, Dalia Marin and Thierry Verdier, (Eds.), The Organizationof Firms in a Global Economy. Cambridge: Harvard University Press, 107–41Das, Mita, Roberts, Mark and James Tybout (2007). Market Entry Costs, Producer Heterogeneityand Export Dynamics. Econometrica, 75(3): 837–74Dixit, Avinish (1989). Hysteresis, Import Penetration, and Exchange Rate Pass-Through.Quarterly Journal of Economics, 104: 205–28Drozd, Lucasz and Jaromir Nosal (2009) .Understanding International Prices: Customers asCapital. Working Paper, University of Wisconsin, Department of Economics