Ryan Monarch from Syracuse University will present "Supply Chains and Trade Facilitation"

Abstract: How do supply chains respond to shocks that make trading easier? This paper examines U.S. buyer- foreign exporter networks following trade facilitation reforms and quantifies how the reduction in barriers that accompanies these reforms affects sourcing behavior and prices. After reforms, even though suppliers are smaller and less is traded within relationships, relationships are much more likely to remain together. These findings indicate the increased importance of relationship-specific investment in supply chains following a reduction in entry barriers, as finding the optimal supplier match becomes easier. To quantify this reduction, I estimate a discrete choice model of supplier matching and find that the benefit of staying an extra year with a partner increases by 8-17% following trade facilitation. Finally, I show that even if switching costs remained low post-reform, there is little effect on prices, as buyers have a greater preference for higher-price reliable suppliers.