with Clémence Lenoir and Julien Martin

This paper studies how frictions in the acquisition of new customers distort the allocation of resources across heterogeneous producers. We add bilateral search frictions in a Ricardian model of trade and use French firm-to-firm trade data to estimate search frictions faced by French exporters. Estimated frictions are more severe in large and distant countries and for differentiated products. A counterfactual reduction in the level of search frictions improves the efficiency of the selection process and increases the average productivity of exports, because the least productive exporters are pushed out of the market, whereas exports increase at the top of the productivity distribution.

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