Cookies?
Library Header Image
LSE Research Online LSE Library Services

Information costs, networks and intermediation in international trade

Petropoulou, Dimitra (2008) Information costs, networks and intermediation in international trade. CEPDP, 848. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282419

[img]
Preview
PDF
Download (514kB) | Preview
Identification Number: 848

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.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2008 Dimitra Petropoulou
Subjects: H Social Sciences > HF Commerce
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Date Deposited: 18 Jul 2008 11:09
Last Modified: 01 Oct 2010 09:12
URI: http://eprints.lse.ac.uk/id/eprint/19640

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics