Entrepreneurship in International Trade

James Rauch and Joel Watson

No 8708, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Motivated by evidence on the importance of incomplete information and networks in international trade, we investigate the supply of 'network intermediation.' We hypothesize that the agents who become international trade intermediaries first accumulate networks of foreign contacts while working as employees in production or sales, then become entrepreneurs who sell access to and use of the networks they accumulated. We report supportive results regarding this hypothesis from a pilot survey of international trade intermediaries. We then build a simple general-equilibrium model of this type of entrepreneurship, and use it for comparative statics and welfare analysis. One welfare conclusion is that intermediaries may have inadequate incentives to maintain or expand their networks, suggesting a rationale for the policies followed by some countries to encourage large-scale trading companies that imitate the Japanese sogo shosha.

JEL-codes: F20 J41 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-ent and nep-mic
Note: ITI
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Citations: View citations in EconPapers (6)

Published as "Network Intermediaries in International Trade", Journal of Economics and Management Strategy. Vol 13 (Spring 2004), pp. 69-93.

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Working Paper: Entrepreneurship in International Trade (2001)
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