We investigate the merger decision between two firms in an outsourcing relationship, one upstream and the other downstream. The inter-firm relationship is subject both to ex ante matching uncertainty and to contractual efficiency issues. Cross-border merger is assumed to solve the latter...

Globalisation is associated with long periods of sustained economic growth and credit expansion, whereas major recessions tend to lead to falling trade and protectionism. The sensitivity of trade to global economic conditions is not simply driven by policy: rather, in a model of costly search,...

This note explores the value of search capital in interfirm matches in the outsourcing trade, by extending Rauch and Casella's (2003) framework to a dynamic model of matching and searching. On provisional calculations, the sunken cost of this search imposes a similar order of magnitude trade...