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Costinot, Arnaud

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Costinot

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Arnaud

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Costinot, Arnaud

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2010 - 20112

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Author's Publications: search.filters.isAuthorOfPublication.44d494fd-e56a-4f8e-86d9-dae8fe89339c

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    Intermediated Trade
    (Massachusetts Institute of Technology Press, 2011) Antras, Pol; Costinot, Arnaud
    This paper develops a simple model of international trade with intermediation. We consider an economy with two islands and two types of agents, farmers and traders. Farmers can produce two goods, but in order to sell these goods in centralized (Walrasian) markets, they need to be matched with a trader, and this entails costly search. In the absence of search frictions, our model reduces to a standard Ricardian model of trade. We use this simple model to contrast the implications of changes in the integration of Walrasian markets, which allow traders from different islands to exchange their goods, and changes in the access to these Walrasian markets, which allow farmers to trade with traders from different islands. We find that intermediation always magnifies the gains from trade under the former type of integration, but leads to more nuanced welfare results under the latter, including the possibility of aggregate losses.
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    Intermediation and Economic Integration
    (American Economic Association, 2010) Antras, Pol; Costinot, Arnaud
    The theory of international trade has paid scant attention to market institutions. Neither neoclassical theory nor new trade models typically specify the process by which supply and demand meet. Yet in the real world, intermediaries play a central role in materializing the gains from exchange outlined by standard trade theories. In Antràs and Costinot (2010), we have developed a stylized but explicit model of intermediation in trade. In this short paper, we present a variant of this model that illustrates the potential role of intermediaries in facilitating the realization of the gains from trade.