OECD imports: Diversification of suppliers and quality search

Details

Serval ID
serval:BIB_382903F5872A
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
OECD imports: Diversification of suppliers and quality search
Journal
Review of World Economics / Weltwirtschaftliches Archiv
Author(s)
Cadot  O., Carrère  C., Strauss-Kahn  V.
ISSN
1610-2878
Publication state
Published
Issued date
02/2014
Peer-reviewed
Oui
Volume
150
Number
1
Pages
1-24
Language
english
Abstract
We posit that OECD buyers are in a continuous search for best quality suppliers from developing countries. We build a simple model of adverse selection and quality screening which captures this feature. The model predicts that diversification happens by "bouts", or temporary episodes, during which OECD buyers search for high-quality suppliers. Each diversification episode is followed by a phase of re-concentration on the best performers, until those fail (which happens stochastically), triggering new search phases. The model also shows that concentration across origin is highly volatile, especially for goods with high-quality heterogeneity. Finally, as the set of suppliers expands and buyers continue sampling, the overall trend is an increased diversification across time. We empirical explore these conjectures using OECD imports over time (1963-2006) and measuring their concentration across 250 origin countries at the product level (1,300 products). We provide strong empirical evidence corroborating the model predictions.
Keywords
Import diversification, international trade, OECD, developing countries, suppliers search
Web of science
Create date
23/06/2014 16:38
Last modification date
21/08/2019 6:16
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