Entrepreneurship in International Trade

38 Pages Posted: 9 May 2011 Last revised: 19 Oct 2022

See all articles by James E. Rauch

James E. Rauch

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Joel Watson

University of California, San Diego (UCSD) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 2002

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.

Suggested Citation

Rauch, James E. and Watson, Joel, Entrepreneurship in International Trade (January 2002). NBER Working Paper No. w8708, Available at SSRN: https://ssrn.com/abstract=1836230

James E. Rauch (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
619-534-2405 (Phone)
619-534-7040 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joel Watson

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States
858-534-6132 (Phone)
619-534-7040 (Fax)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
62
Abstract Views
1,394
Rank
630,179
PlumX Metrics