A Search Cost Perspective on Duration of Trade

Temporary trade and heterogeneous firms

“…In the learning model of Rauch and Watson (2003), new entrants should only continue the relationship if the potential partner successfully stood this test. In this spirit, Besedes (2006) shows that initial size, risk and search costs play an important role in determining the duration of a trade relationship. Higher reliability and lower search costs lead to larger initial transactions and longer duration.…”

Die another day: duration in German import trade

“…Redding (2002) documents the evolution in the pattern of specialization across OECD countries. While these studies often emphasize the mobility in trade patterns, the duration of trade has previously been analyzed only by Besedeš andPrusa (2006a, 2006b). There is also a recent 2 Evenett and Venables (2002) find, for a sample of 23 developing countries, that the number of zeros in bilateral trade matrices has fallen considerably over time; their estimates imply that the increase in the number of trading partners (what they call "geographic spread of trade") accounts for about one third of developing economies' export growth since 1970.…”

“…In combination with other evidence on the (shortrun) persistence in international trade (e.g., the empirical success of the gravity model of trade, the role of networks in trade), the small variation in the total number of product-level trade relationships may be just another indication that trade patterns are relatively stable over time. 1 Contrary to this belief, however, Besedeš andPrusa (2006a, 2006b) have recently argued in a series of papers that trade relationships are often very short-lived. Examining the duration of U.S. imports, they find that the U.S. pattern of foreign sourcing is surprisingly dynamic; the median duration of importing a product from a foreign supplier in their sample is just one year.…”

Are You Experienced? Survival and Recovery of Trade Relations after Banking Crises

“…As mentioned by Besedes (2007), "for some products $15,000 may be big and for others $1 million could be small". In column (3) we include a relative measure of size, "market share", to deal with the issue of product heterogeneity.…”

“…Based on the previous evidence, the objective of the second part of this paper is to investigate which 1 See, among others, Besedes and Prusa (2006b), Besedes (2007), Brenton, Saborowski and von Uexkull (2009), Fugazza and Molina (2009), and Volpe-Martincus and Carballo (2009) for a study using firmlevel export data. 2 The reason to have the US as destination country is that the original trade data we use (from Global Trade Atlas) contains information at the 10 digit level of disaggregation only for trade flows in and out the US.…”