Assortative Matching of Exporters and Importers

Tuesday, 29 November, 2016
This paper by Teshima, Sugita and Seira (2015) examines the mechanism determining the matching of exporting firms and importing firms. From transaction data of Mexican textile/apparel exports to the US, they report two new facts on exporter–importer matching at the product level. First, matching is approximately one-to-one. Second, in response to the entry of Chinese exporters into the US market induced by the end of the Multifibre Arrangement (MFA), US importers switched their Mexican partners to those making greater preshock exports whereas Mexican exporters switched their US partners to those making fewer preshock imports. To explain these facts, they present a model combining Becker-type positive assortative matching of final producers and suppliers by their capability with the standard Melitz-type model. The model indicates that the observed matching change is evidence for a new source of gains from trade associated with firm heterogeneity.