Search and Matching, Contracting, and the Division of Gains from Trade

A well-known prediction in the “new” trade theory is that markups fall with trade liberalization.  The reason is that, because larger firms and/or more concentrated industries enjoy more market power, their prices are more responsive to an increase in foreign competition.  There are efficiency gains and consumers benefit from cheaper domestically produced and imported goods.  However, micro-econometric studies have revealed situations where this prediction fails in practice.  For example, one study on India’s trade liberalization shows that changes in marginal costs do not reflect perfectly changes in prices due to variable markups (i.e., there is incomplete pass-through).  Moreover, the most likely beneficiaries of trade liberalization are not consumers, but instead domestic Indian firms who enjoy lower production costs while simultaneously raise markups.  This type of non-standard outcome has given rise to a literature that evaluates, theoretically and empirically, the distribution of gains from trade liberalization among consumers, importers, exporters, and traders (aka intermediaries) as well as the implications for overall welfare.

One branch of the literature, by building on a search and matching approach, aims to quantify the gains from trade while allowing buyers and sellers to be heterogeneous.  One study on Colombia’s footwear industry suggests that the outcome from trade liberalization is more likely to be positive for welfare.  This is explained by the entry of Chinese firms into the Colombian market, combined with a reduction in search costs of Colombian traders acting as importers after liberalization.  In contrast, a different study shows that there is a loss of aggregate welfare in a country where the exporters’ bargaining power is small with respect to traders.  This setting is typical of developing countries with farmers as exporters negotiating with traders from developed countries. The intuition is that there is a trade externality underlying the search friction in goods markets that not only affects the division of surplus between farmers and traders, but also the entry of foreign traders into the market.  This, in turn, affects trading prospects of farmers who are not matched to a trader.  The loss of welfare occurs because farmers and traders only bargain after they find a match and their negotiations fail to internalize this externality.

Another branch of the literature uses a contracting approach to explore the idea that trade liberalization may induce firms to replace trade barriers with contracts that preclude consumers reaping the gains yielded by market integration.  The root of this issue is in the successive markups by exporters and traders that might emerge from an imperfectly competitive market structure (double marginalization).  In addition, if products are differentiated, competing traders impose a business-stealing effect on each other, which lowers their profits.  Exporters can overcome the inefficiency related to the double marginalization by offering bilateral contracts that specify fixed payments and quantities.  If the contract offered is also joint with the competing traders the business-stealing effect can be mitigated.  However the outcome may be detrimental to consumers: higher profits with restricted sales imply higher consumer prices.  Another study on Colombia finds that after the US-Colombia Free Trade Agreement was signed and American exporters started to enjoy duty-free access to the Colombian market, product prices rose, lower quantities were shipped and the number of trader partners in Colombia was reduced.  But because contracting corrects for such inefficiencies the resulting effect on aggregate welfare is unclear.

As micro data become available, researchers will be able to evaluate the distributional implications of contracting and search-and-matching more accurately.  These will have the potential to make valuable contributions towards the determination of trade policies that lead to greater aggregate welfare.


Antràs, Pol and Arnaud Costinot (2011) “Intermediated Trade,” Quarterly Journal of Economics, 126: 1319-1374.

Bernard, Andrew B. and Swati Dhingra (2015) “Contracting and the Division of Gains from Trade“, Working Paper.

De Loecker, Jan, Pinelopi K. Goldberg, Amit K. Khandelwal and Nina Pavcnik (2016) “Prices, Markups, and Trade ReformEconometrica, 84 (2): 445-510. [working paper]

Eaton, Jonathan, David Jinkins, James Tybout and Daniel Yi Xu (2016) “Two-sided Search in International Markets,” Working Paper.

Raff, Horts and Nicholas Schmitt (2005): “Endogenous vertical restraints in international trade,” European Economic Review, 49 (7): 1877–1889 [working paper]

Rauch, James (1999) “Networks versus Markets in International Trade,” Journal of International Economics, 48: 7-35.

Tybout, James R. (2003): “Plant-and firm-level evidence on “new” trade theories,” In: E. Kwan Choi and James Harrigan (eds) Handbook of International Trade, Blackwell Publishing, Malden.


The Scientific Conference of Microfinance and Sustainable Development

The 2017 Annual Intellectual Symposium of Microfinance and Sustainable Development will take place this year on 20th June 2017. The Symposium is held every year in Ottawa, Canada to discuss intellectual research work on Microfinance and Sustainable Development and related domains.

The Conference is organized by ECO-ENA: Economics & ECO-Engineering Associate, Inc.®, Canada

All research work in the field of Microfinance and Sustainable Development and related areas are welcomed to be submitted for evaluation and for potential presentation at  . Deadline for paper submissions is 15th May 2017.

For more details and to register, please visit the conference website below.

Social Innovation Tournament

The Social Innovation Tournament recognises and supports the best European social entrepreneurs. It is organised every year in a different country to reward and sponsor European entrepreneurs whose primary purpose is to generate a social, ethical or environmental impact.

Four prizes are awarded by a Jury, composed of specialists from the academic and business world: General Category and Special Category 1st and 2nd Prizes of EUR 50 000 and EUR 20 000 respectively.  In 2017, the Special Category Prizes will go to projects focusing on ageing.

Projects are typically related to combating unemployment, marginalisation of disadvantaged communities and promoting access to education in a wide range of fields, from education and health care to natural or urban environment, through new technologies, new systems, and new processes.

The Tournament runs in two rounds. A Selection Committee comprised mainly of EIB Group experts in innovation, the environment, and other relevant disciplines, selects 15 finalists. The finalists are invited to a mentoring bootcamp to provide them with the necessary guidance for the finalisation of their proposals. In the Final Event, all the finalists have to present and defend their project to a Jury composed of social innovation specialists.

In 2017, the Final Event, will take place in Riga, Latvia, on 21 September, where the fifteen selected projects will compete for the four prizes and several mentoring vouchers.

The EIB Institute, in collaboration with the Universidade Católica Portuguesa, also organised for the first time in 2016 an SIT Impact Bootcamp where a dozen selected social entrepreneurs benefited from a full-time executive training course focused on scaling, pitching and engagement with investors.

If you have any questions, please email .

For more information about the SIT, please click on the links below.

Rules for applicants

Key dates & deadlines

Frequently Asked Questions

Scholarships for New MRes and PhD research programme in Economics

The Adam Smith Business School at the University of Glasgow is now recruiting for the 2017 intake for our comprehensive MRes and PhD research programme in Economics.

The 2 year MRes programme is normally followed by the 3 year PhD stage. The University of Glasgow will fund up to six studentships covering tuition fees and a stipend for up to five years to enable students to receive comprehensive MRes (pre-PhD) training and to subsequently undertake research in a chosen field of economics, leading to a PhD.

Students are admitted first into a 2-year programme of coursework consisting of core courses in Microeconomics, Macroeconomics and Econometrics, followed by elective field courses, which leads to the MRes (Master in Research) degree.

Candidates who complete the MRes at a sufficiently high level are automatically admitted into the 3-year PhD programme of supervised independent research.

The Adam Smith Business School has a large group of research-active economists whose interests span a wide range of fields, allowing the school to offer supervision across most areas of economics and finance. The Economics group runs four seminar series and regularly hosts workshops and conferences.


The studentship will run for a maximum of 5 years. Each year’s funding is conditional on successful progression and acceptance into the PhD programme and includes:

  • tuition fees at the standard Home/EU or international rate
  • an annual bursary equivalent to the RCUK rate – £14,254 TBC for 2017/18
  • during the 3 PhD years there will be a research support grant of £750 per annum.

Entry Requirements

Candidates should hold a 2:1 Honours degree or non-UK equivalent (eg, a GPA of 3.0 or above) in Economics or a related subject with substantial technical component (e.g. Mathematics, Statistics, Physics, Engineering) You will also need to submit a personal statement which clearly evidences a strong desire to pursue an academic career in Economics and show evidence of exposure to multivariable calculus, matrix algebra and basic probability/statistics. Only academic references will be accepted. Referees will know the applicants in the capacity of students/researchers, not from internship or work in private/public sector. Applicants are encouraged to submit any additional (academic) documents they believe will support their application.

To be eligible for this studentship, you must hold an offer for the MRes Economics at ASBS. Countries of eligibility are Scotland, England, Northern Ireland, Wales, EU, and International.


Studentships are awarded on a competitive basis.

March 2017: First round of awards

Candidates who apply for the studentship and complete an application for the Economics MRes by 15 March will be considered for the studentship in the second half of March. Candidates will be informed of the outcome by email by 31 March 2017.

June 2017: Second round of awards

Candidates who apply for the scholarship and complete an MRes application by 1 June will be considered in June. Candidates will be informed of the outcome by email by 19 June 2017.


The largest city in Scotland, Glasgow has a reputation for being a welcoming, fun-filled and accessible place to live, with something to offer every taste and budget.

Whether you crave cosy campus living or big city excitement you’ll be inspired by our excellent location in the friendly West End of Glasgow.

With 560 years’ experience in producing academic excellence, the University of Glasgow has an impressive past. However, we’re always looking ahead and our role is to pass on our knowledge and expertise so that you can make the world a better place for yourself and for others.

Our students graduate equipped with the skills they need to compete in a global workplace, and with friendships and networks that last a lifetime.

How to apply

In addition to submitting an application for the MRes Economics programme the applicant should email stating that they wish to be considered for the scholarship and include their applicant ID.

For more information please contact:

For detailed information about the programme and the admission process please click on the link for Further Information below

Area of Study or Research:

  • Economics
  • Finance

Application Requirements:

  • You must hold an offer for the MRes Economics at ASBS

More Information

Call for Papers: Workshop on Political Economy, Rio de Janeiro Brazil, May 22-23 2017

The Research Institute for Development, Growth and Economics (RIDGE) and the LACEA Political Economy Group (PEG) are pleased to announce a call for papers for the RIDGE/LACEA-PEG Workshop on Political Economy to be held at the Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Brazil, on 22-23 May 2017.

The deadline for submission is February 28/02/17

The 2017 meeting will take place in Rio de Janeiro, hosted by PUC-Rio, within the framework of the 2017 RIDGE May Forum along with the following workshops:

  • LACEA Trade, Integration and Growth Network, May 19-20 (Montevideo, Uruguay)
  • RIDGE/LACEA-PEG Workshop on Political Economy, May 22-23 (Rio de Janeiro, Brazil)
  • Impact Evaluation of Labor Market Policies, May 24-26 (Rio de Janeiro, Brazil)
  • Public Economics, May 25-26 (Montevideo, Uruguay)
  • Economic History, May 26-27 (Montevideo, Uruguay)

The Political Economy Group of LACEA has held annual meetings since 1998. As in previous years, the 2017 meeting aims to promote the discussion around the connection between economics and politics that is relevant for Latin American and Caribbean economies. The focus of the meeting will be on the connection between economics and political institutions broadly understood, including legislatures, courts, executives, political parties, elections, weakly institutionalized environments, the institutions of federalism and the workings of the public service.

The accepted contributions are expected to be relevant for understanding the most challenging problems of Latin America and Caribbean countries. This allows for papers addressing issues in other regions when those issues are deemed relevant to the Latin American context. Studies of specific Latin American countries, as well as comparative institutional analyses are also welcome. Both theoretical and empirical contributions are welcome. There will be a dedicated discussant for each paper, as well as open floor discussion.

LACEA-PEG co-directors: Ernesto Dal Bó (UC Berkeley) Claudio Ferraz (PUC-Rio) Scientific Committee: Timothy Besley (LSE) Ernesto Dal Bó (UC Berkeley) Claudio Ferraz (PUC-Rio) Frederico Finan (UC Berkeley) Alvaro Forteza (U de la República) Ernesto Stein (IADB)

The RIDGE Forums and LACEA networks aim to favor the spread of high quality research in economics by bringing together top local and regional researchers working on the frontier of knowledge and policymakers. Participants to any workshop are welcome and encouraged to attend the other workshops.

Doctoral Positions at the Munich Graduate School of Economics

The Department of Economics at Ludwig-Maximilians-Universität München offers various


Successful candidates will pursue their Ph.D. studies at the Munich Graduate School of Economics (MGSE).

The MGSE provides advanced training for in-depth research in economics. The MGSE’s Ph.D. program has a strong focus on the application of state-of-the-art methods. It combines demanding course work and an early start of individual research. Positions offer comprehensive supervising and mentoring schemes, excellent international contacts, and access to an outstanding research infrastructure from one of Europe’s’ top 10 Universities.


We expect knowledge in microeconomics, macroeconomics, and econometrics at an advanced Master’s level. Therefore, the standard entry requirement is a completed Master’s degree in economics. Exceptions from this rule are possible in special circumstances. Any missing graduate-level training will be specified in an individual supervision agreement. Candidates should be highly motivated to conduct independent research. Fluency in German language is not required for admission.


Generally, Ph.D. students are paid according to a 75% position under the German TVL-E 13 payment scheme (or a roughly equivalent scholarship). The exact salary might slightly vary depending on personal circumstances, the affiliating institution and the teaching load the position might carry (maximally 5 hours per week during the semester). Funding for the positions will come from one of the following programs or institutions: Department Chairs, Egon Sohmen Graduate Center, Evidence-Based Economics, GRK 1928 – Microeconomic Determinants of Labor Productivity, ifo Institute, Max Planck Institute for Innovation and Competition, Max Planck Institute for Tax Law and Public Finance.

Application Procedure:

The application period is from December 15th, 2016 to March 31th, 2017. In general, the positions and courses start in October 2017. The application tool will be available on our webpage.

An admission committee will screen applications on a rolling basis. Applicants who present a detailed offer by another doctoral program may ask the admission committee for an early decision on their admission.

Applicants need the following documents for their application: CV, Letter of Motivation, Certificate of Secondary Education (if available, encouraged), Bachelor Diploma, Master Diploma (or preliminary Transcript of Records), Proof of English-skills, GRE-Test, and two recommendation letters. All documents have to be either in English or German.


Munich Graduate School of Economics

Job Opportunity: Professor of International Trade and Development, Goethe University Frankfurt am Main

The Faculty of Economics and Business Administration at Goethe University Frankfurt invites applications for the following position starting at the earliest possible date:

Professorship (W3) for International Trade and Development

The professorship is part of the Department of Applied Econometrics and International Economic Policy and should fit into its teaching and research profile.

Applicants should have a record of publications in leading journals. A research focus should lie in international trade, foreign direct investment, migration and allocation of human capital or globalization. Connections to growth and development are desirable. We expect excellent teaching performance and sound empirical and theoretical methods. Teaching is expected at the Bachelor, Master, and PhD levels. The ability to teach in English is required. German knowledge would be useful.

Teaching obligations are 8 hours per week during the teaching period. The designated salary for the position is based on “W3” on the German university scale or equivalent. Goethe University is committed to increasing the proportion of female faculty and therefore especially encourages women to apply. For further information regarding the general conditions for professorship appointments, please see

Researchers with an excellent research and teaching record are cordially invited to send their applications in German or English, accompanied by the usual documents (CV, record of publications, teaching experience and extramural funding, certificates) and citing the reference “Professorship (W3) for International Trade and Development“ until March 16th, 2017 via e-mail to the Dean of the Faculty of Economics and Business Administration: .

For further information, please contact Prof. Dr. Alfons Weichenrieder,e-mail: .

Job Opportunity: Full Professor, International Economics, Ludwig-Maximilians-Universität (LMU)

As one of Europe’s leading research universities, Ludwig-Maximilians-Universität (LMU) in Munich is committed to the highest international standards of excellence in research and teaching. Building on its more than 500-year-long tradition, it offers a broad spectrum that covers all areas of knowledge within its 18 Faculties, ranging from the humanities, law, economics and social sciences, to medicine and the natural sciences.

The Faculty of Economics invites applications for a

Full Professorship (W3) of Economics with Emphasis on International Economics (Chair)

commencing on April, 1 2018.

The successful candidate is expected to carry out both teaching and research in a field of International Economics

Candidates should have a strong international research record. The appointee will be expected to teach courses at all levels in the Faculty of Economics.

Prerequisites for this position are a university degree, a doctoral degree or a comparable specific qualification, teaching skills at university level, excellent academic achievements and a productive and promising research program.

LMU Munich makes a point of providing newly appointed professors with various types of support, such as welcoming services and assistance for dual career couples.

LMU Munich is an equal opportunity employer. The University continues to be very successful in increasing the number of female faculty members and strongly encourages applications from female candidates. LMU Munich intends to enhance the diversity of its faculty members. Furthermore, disabled candidates with essentially equal qualifications will be given preference.

Please submit your application comprising a curriculum vitae, documentation of academic degrees and certificates, teaching evaluations as well as a list of publications electronically via the LMU Application Tool, no later than March 17, 2017. Furthermore, two research papers should be submitted that the candidate considers particularly helpful to support the application. The link for the application tool is Addressee for your letter of application is the Office of the Dean, Faculty of Economics, Schackstrasse 4, 80539 Munich, Germany.

Job Opportunity: Junior Research Scientist – International trade applied to agriculture and environment

INRA (the French National Institute for Agricultural Research) is seeking a junior research scientist with a focus on international trade applied to agriculture and/or environment. This is a permanent (no tenure track) and research-only position, although some teaching is possible. Candidates must  hold a PhD when they apply. The successful candidate will join the research unit “Economie Publique” in Paris.

Interested candidates are invited to get in touch with Christophe Gouel () before applying.

Candidates have until March 1st (5pm, Paris time) to submit their application online, or until March 3rd to send the application form by post.

Job description and futher information

Job Opportunity: Temporary Lecturer in Economics, UC San Diego

The Economics Department at UC San Diego is committed to building an excellent and diverse faculty, staff, and student body, and invites applications from candidates whose experience has prepared them to contribute to our commitment. The Department invites applications for one or more Lecturer positions. The Department is looking primarily for Lecturers in macroeconomics and econometrics, although applications in any area will be accepted. Appointments will likely be part-time, though possibly full time, from one quarter up to one year’s duration, for the 2017/18 Academic Year.

Candidates are required to have a Bachelor’s degree in economics or a related field. Preferred candidates will have a Ph.D. in economics or a related field, prior university level teaching experience, experience managing large classrooms (100-300 students), outstanding teaching evaluations and demonstrate strong or potential contributions to diversity, equity, and inclusion in the context of a large public university.

Salary is commensurate with qualifications and experience based on the UC pay scales.


Closing Date:
Applications will be accepted until June 30, 2017.

To Apply:
Submit a vita, three original letters of reference, past teaching evaluations, and a personal statement on diversity. The personal statement on diversity should summarize past experience in activities that promote diversity and inclusion and/or plans to make future contributions.

Applications are accepted through UC Recruit only. Please follow the direct link to apply.

The University of California is an Equal Opportunity/Affirmative Action Employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, disability, age or protected veteran status