Distance between buyers and sellers can create search and contracting problems: how to find out what goods are available and ensure they are actually delivered. I estimate the magnitude of these frictions faced by Nigerian importers by exploiting the fact that travelling to do business in person is a common and observable strategy for coping with them. Using original data that includes the
process of trade, I build and estimate a model that embeds search and moral hazard into a trade framework, in which buyers may choose to travel to find the latest goods and conduct spot transactions. Welfare from imported consumer goods increases by 14% in the absence of both frictions, with one-third of gains coming from search. Counterfactual scenarios focused on airline regulation and financial services suggest that attention to such topics not typically considered market integration policies could have large welfare effects via trade in developing countries.
