Transitivity in International Trade: Evidence from Colombia-U.S. Firm Relationships
Fuente:
arXiv
Saved in:
| Main Authors: | , , |
|---|---|
| Format: | Preprint |
| Published: |
2025
|
| Subjects: | |
| Online Access: | |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1866912781784055808 |
|---|---|
| author | Martinez, Alejandra Novy, Dennis Perroni, Carlo |
| author_facet | Martinez, Alejandra Novy, Dennis Perroni, Carlo |
| contents | A large literature has documented transitivity as a key feature of social networks: individuals are more likely connected with each other if they share common connections with other individuals. We take this idea to trading relationships between firms: firms are more likely to trade with each other if they share common trading partners. Transitivity leads to a clustered pattern of relationship formation and break-up. It is therefore important for understanding how firms meet and how shocks propagate through firm networks. We describe a method for detecting and quantifying transitivity in firm-to-firm transactions, based on systematic deviations from conditional independence across firm-to-firm relationships. We apply the method to Colombia-U.S. exporter-importer data and show in counterfactuals that transitivity is a significant and economically meaningful factor in how firm networks adjust to cost shocks. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2512_18893 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Transitivity in International Trade: Evidence from Colombia-U.S. Firm Relationships Martinez, Alejandra Novy, Dennis Perroni, Carlo General Economics Economics A large literature has documented transitivity as a key feature of social networks: individuals are more likely connected with each other if they share common connections with other individuals. We take this idea to trading relationships between firms: firms are more likely to trade with each other if they share common trading partners. Transitivity leads to a clustered pattern of relationship formation and break-up. It is therefore important for understanding how firms meet and how shocks propagate through firm networks. We describe a method for detecting and quantifying transitivity in firm-to-firm transactions, based on systematic deviations from conditional independence across firm-to-firm relationships. We apply the method to Colombia-U.S. exporter-importer data and show in counterfactuals that transitivity is a significant and economically meaningful factor in how firm networks adjust to cost shocks. |
| title | Transitivity in International Trade: Evidence from Colombia-U.S. Firm Relationships |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2512.18893 |