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Enrique Seira
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Publisher: Journals Gateway
The Review of Economics and Statistics (2023) 105 (6): 1544–1561.
Published: 17 November 2023
Abstract
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This paper studies how exporting and importing firms match based on their capability by investigating the change in such exporter-importer matching during trade liberalization. During the recent liberalization of the Mexico-U.S. textile and apparel trade, exporters and importers often switch their main partners as well as change trade volumes. We develop a many-to-many matching model of exporters and importers where partner switching is the principal margin of adjustment, featuring Beckerian positive assortative matching by capability. Trade liberalization achieves efficient global buyer-supplier matching and improves consumer welfare by inducing systematic partner switching. The data confirm the predicted partner-switching patterns.
Includes: Supplementary data