Factor content of bilateral trade: the role of firm heterogeneity and transaction costs
AbstractThe article studies the determinants of the factor content in foreign trade in countries from Central and Eastern Europe (CEE). The theoretical model relaxes several important assumptions such as factor price equalization, firm heterogeneity, and introduces technological differences into the standard Heckscher-Ohlin model. Based on the agricultural production and trade data for the CEE, we examine empirically three hypotheses, which relate cross-country differences in technology, relative factor abundance and transaction costs and market imperfections to the factor content of trade. We find that the first two hypotheses are confirmed by the majority of the developed EU countries, but rejected by roughly one half of the CEE transition country pairs. Second, we find that when accounting for the transaction costs of farm (re)organization, both hypotheses are confirmed by the majority of the CEE country pairs. These findings provide indirect evidence of market imperfections, and particularly, of transaction costs of farm (re)organization in the CEE. Copyright (c) 2010 International Association of Agricultural Economists.
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Bibliographic InfoArticle provided by International Association of Agricultural Economists in its journal Agricultural Economics.
Volume (Year): 41 (2010)
Issue (Month): 3-4 (05)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0169-5150
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Other versions of this item:
- d'Artis Kancs & Pavel Ciaian, 2009. "Factor Content of Bilateral Trade: The Role of Firm Heterogeneity and Transaction Costs," LICOS Discussion Papers 23809, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Kancs, d'Artis & Ciaian, Pavel, 2009. "Factor Content of Agricultural Trade: The Role of Firm Heterogeneity and Transaction Costs," 2009 Conference, August 16-22, 2009, Beijing, China 51429, International Association of Agricultural Economists.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
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- Pavel Ciaian & d'Artis Kancs & Jan Pokrivcak, 2008.
"Comparative Advantages, Transaction Costs and Factor Content of Agricultural Trade: Empirical Evidence from the CEE,"
EERI Research Paper Series
EERI_RP_2008_03, Economics and Econometrics Research Institute (EERI), Brussels.
- Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2011. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE - Vantaggi comparati, costi di transazione e contenuto dei fattori nel commercio agr," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 64(1), pages 67-101.
- Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2008. "Comparative Advantages, Transaction Costs and Factor Content in Agricultural Trade: Empirical Evidence from the CEE," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44135, European Association of Agricultural Economists.
- Ciaian, Pavel & Kancs, d'Artis & Pokrivcak, Jan, 2013. "Empirical Evidence of the Distributional Effects of the CAP in New EU Member States," Factor Markets Working Papers 170, Centre for European Policy Studies.
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