Administrative barriers to trade

Hornok, C [Hornok, Cecília (közgazdaságtan), author] Lendület Firms, Strategy and Performance Resear... (MTA KRTK / KTI); Koren, M [Koren, Miklós (Makrogazdaságtan), author] Institute of Economics (MTA KRTK)

English Article (Journal Article) Scientific
Published: JOURNAL OF INTERNATIONAL ECONOMICS 0022-1996 96 (S1) pp. 110-122 2015
  • Gazdaságtudományi Doktori Minősítő Bizottság: A nemzetközi
  • Nemzetközi és Fejlődéstanulmányok Doktori Bizottság: A nemzetközi
  • SJR Scopus - Economics and Econometrics: D1
  • (LP2013-56) Funder: MTA Lendület
  • Economics and Business
We build a model of administrative barriers to trade to understand how they affect trade volumes, shipping decisions and welfare. Because administrative costs are incurred with every shipment, exporters have to decide how to break up total trade into individual shipments. Consumers value frequent shipments, because they enable them to consume close to their preferred dates. Hence per-shipment costs create a welfare loss.We derive a gravity equation in our model and show that administrative costs can be expressed as bilateral ad-valorem trade costs. We estimate the ad-valorem equivalent in Spanish shipment-level export data and find it to be large. A 50% reduction in per-shipment costs is equivalent to a 9 percentage point reduction in tariffs. Our model and estimates help explain why policy makers emphasize trade facilitation and why trade within customs unions is larger than trade within free trade areas. © 2015 The Authors.
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2022-07-01 01:04