TY  - JOUR
AU  - Rauch,James E.
AU  - Watson,Joel
TI  - Entrepreneurship in International Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8708
PY  - 2002
Y2  - January 2002
UR  - http://www.nber.org/papers/w8708
L1  - http://www.nber.org/papers/w8708.pdf
N1  - Author contact info:
James E. Rauch
Department of Economics
University of California, San Diego
La Jolla, CA 92093-0508
Tel: 858/534-2405
Fax: 858/534-7040
E-Mail: jrauch@weber.ucsd.edu

Joel Watson
UC, San Diego
Department of Economics, 0508
9500 Gillman Drive
La Jolla, CA 92093-0508
E-Mail: jwatson@ucsd.edu
AB  - Motivated by evidence on the importance of incomplete information and networks in international trade, we investigate the supply of 'network intermediation.'  We hypothesize that the agents who become international trade intermediaries first accumulate networks of foreign contacts while working as employees in production or sales, then become entrepreneurs who sell access to and use of the networks they accumulated.  We report supportive results regarding this hypothesis from a pilot survey of international trade intermediaries.  We then build a simple general-equilibrium model of this type of entrepreneurship, and use it for comparative statics and welfare analysis.  One welfare conclusion is that intermediaries may have inadequate incentives to maintain or expand their networks, suggesting a rationale for the policies followed by some countries to encourage large-scale trading companies that imitate the Japanese sogo shosha.
ER  -