Meredith Startz (Princeton) will present:
"The value of face-to-face: Search and contracting problems in Nigerian trade"
at 3:20pm on Wednesday, April 25, 2018 in 310 Silsby.

Please sign up for a meeting, lunch, or dinner at:
https://docs.google.com/spreadsheets/d/1d5pfEkZkvmetmGP7K0GOxsxlcLTyXnY6meKijDhry64/edit?usp=sharing

ABSTRACT:
Distance between buyers and sellers can create search and contracting problems: how to find out what goods are available in far away places, and ensure they are actually delivered? I estimate the magnitude of search and contracting frictions faced by Nigerian consumer goods importers by exploiting the fact that traveling to do business in person is a common and easily observable strategy for coping with them. I collect transaction-level panel data that combines the "what" of trade (e.g. products, quantities) with variables describing "how" trade is conducted (e.g. travel, payments terms). To account for patterns inconsistent with a full information environment, I build and estimate a model that embeds a search problem and a repeated game with moral hazard into a monopolistically competitive trade framework. Welfare from imported consumer goods would be 29% higher in the absence of both frictions, with roughly two-thirds of the gains coming from search. Counterfactual scenarios focused on airline regulation, financial services, and market size suggest that greater attention to market integration policies beyond transportation and tariffs could have large welfare effects, particularly in developing countries.





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