Scandinavian Working Papers in Economics
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Department of Economics, University of Bergen Working Papers in Economics, Department of Economics, University of Bergen

No 04/15:
Duration and temporary trade

Hans-Martin Straume () and Frank Asche ()

Abstract: While the theory on the dynamics of trade duration is formulated at the firm level, most empirical analysis has been undertaken with data at a country and industry level. In this study, we have access to firm export data including the importing firm for one industry Norwegain salmon farming. This allow us to study trade dynamics in greater detail. Trade duration is investigated using two approaches; by estimating hazard rates, and by using a multinominal logit model. In the latter approach, we define the length of a trade relationship by number of transactions, including one category with relationships containing only one transaction hit and run strategies. As expected, the results indicate that the degree of dynamics increases as the data becomes more disaggregated. These results highlight the importance of firm-level data to understand the full extent of trade duration dynamics. It is of particular interest that trade relationships are shorter in larger markets being served by many companies and where competition, accordingly, seems keen, a feature that is masked in industry-level data.

Keywords: aquaculture; salmon; duration of trade; hit-and-run; temporary trade; (follow links to similar papers)

JEL-Codes: C41; F10; F14; (follow links to similar papers)

28 pages, October 3, 2015

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