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Are Trading Partners Complementary in International Trade?

Discussion Papers

No.250

August 2010

ABSTRACT

We use a unique dataset on trading transactions at the firm level to investigate a complementary effect in international transactions between sellers and buyers; trading transactions are more likely to be international when both sellers and buyers are large in size than when either sellers or buyers are large. Our econometric analysis provides evidence for the complementary effect between trading partners on the likelihood of international trade, which is most prominent for exports from North to South.

Keywords: Self-selection; Firm heterogeneity; Matching
JEL classification: D24; F10

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