We thank Alan Deardorff for comments on an earlier draft of the paper.
Article first published online: 6 MAR 2013
© 2013 John Wiley & Sons Ltd
The World Economy
Volume 36, Issue 9, pages 1165–1186, September 2013
How to Cite
Panagariya, A. and Bagaria, N. (2013), Some Surprising Facts About the Concentration of Trade Across Commodities and Trading Partners. World Economy, 36: 1165–1186. doi: 10.1111/twec.12060
- Issue published online: 6 SEP 2013
- Article first published online: 6 MAR 2013
The present paper documents unexplained concentration in trade. Bernard et al. (Producer Dynamics: New Evidence from Micro Data, 2009, University of Chicago Press) have documented concentration at the level of the firm and in exports. Taking a step forward, we document trade volume concentration at the level of nations and in both exports and imports. Firm level concentration has been relatively easy to explain in terms of models of heterogeneous-firm models with entry costs in both the domestic and foreign markets. But as we shall see, the concentration at the level of the nation, especially in imports if not exports, turns out to be far more difficult to explain.