Transaction costs are a major reason why international trade flows are much smaller than traditional trade theory would … suggest. Trust between trading partners lowers transaction costs and may therefore enhance trade. The empirical analysis of … this paper shows that more trust leads to more trade so that part of the mystery of missing trade can be attributed to the …

The business literature suggests that exporters either use trade intermediaries or own foreign sales representations …. Standard trade models are silent about this choice. We develop a model where producers differ with respect to competitive … advantage and where trade intermediaries arise endogenously. Intermediaries allow producers to access a foreign market at lower …