Speaker
Andrew Bernard has been on the faculty at Tuck since 1999. He received his Ph.D. from Stanford in economics in 1991 and was on the faculty at MIT and Yale prior to coming to Tuck. Professor Bernard is an expert in international trade and investment and specializes in firm responses to globalization. In recent papers, he has documented the emergence of factory-less goods producers in the US, revisited traditional views of deindustrialization and explored the dynamics of new exporters and the role of intermediaries in global trade. His current research focuses on the evolution of global (and domestic) production networks and the consequences for firm performance. Professor Bernard was named by Thompson Reuters as one of the World’s Most Influential Scientific Minds in 2014 and is among the 100 most cited economists. He received a National Science Foundation grant to study firm responses to international trade. In addition to being published in top academic journals such as the American Economic Review, the Quarterly Journal of Economics and the Review of Economic Studies, his research has been featured on CNN, CNBC, Good Morning America, MSNBC, NPR's Morning Edition, the Marketplace Morning Report, the BBC, and in the New York Times, Wall Street Journal, Financial Times, the Economist, Nikkei, Fortune, and Business Week. More >>
Abstract
This paper examines the microstructure of import markets and the division of the gains from trade among consumers, importers and exporters. When exporters and importers transact through anonymous markets, double marginalization and business stealing among competing importers lead to lower profits. Trading parties can overcome these inefficiencies by investing in richer contractual arrangements such as bilateral contracts that eliminate double marginalization and joint ventures that internalize business stealing. Introducing these contractual choices into a trade model with heterogeneous exporters and importers, we show that trade liberalization increases the incentive to form joint ventures, thus raising the profits of exporters and importers at the expense of consumer welfare. We examine the implications of the model for prices, quantities and exporter-importer matches in Colombian import markets before and after the US-Colombia free trade agreement. US exporters that started to enjoy duty-free access were more likely to increase their average import price, decrease their quantity exported and reduce the number of import partners.
Last Updated: Nov 06, 2014