Discussion Paper Details

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Title: Intermediation and Economic Integration

Author(s): Pol Antrąs and Arnaud Costinot

Publication Date: February 2010

Keyword(s): economic integration, gains from trade, intermediation and search frictions

Programme Area(s): Development Economics and International Trade and Regional Economics

Abstract: The theory of international trade has paid scant attention to market institutions. Neither neoclassical theory nor new trade models typically specify the process by which supply and demand meet. Yet in the real world, intermediaries play a central role in materializing the gains from exchange outlined by standard trade theories. In Antrąs and Costinot (2010), we have developed a stylized but explicit model of intermediation in trade. In this short paper, we present a variant of this model that illustrates the potential role of intermediaries in facilitating the realization of the gains from trade.

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Bibliographic Reference

Antrąs, P and Costinot, A. 2010. 'Intermediation and Economic Integration'. London, Centre for Economic Policy Research.