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Explaining National Border Effects in the QUAD Food Trade

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  • Alessandro Olper
  • Valentina Raimondi

Abstract

Using a 'structural' gravity-like model, this paper first provides estimates of bilateral 'border effects' in food trade among the QUAD countries (the US, Canada, Japan and the EU) at the ISIC (International Standard Industrial Classification) four-digit level (18 food sectors). It then investigates the underlying reasons for border effect, assessing the role played by policy barriers (tariffs, non-tariff barriers to trade (NTBs) and domestic support) with respect to barriers unrelated to trade policy, such as information-related costs, cultural proximity and preferences. In contrast to several previous findings, our results show that policy trade barriers, especially in the form of NTBs, are part of the story in explaining national border effects. Interestingly, in all country pair combinations, NTBs significantly dominate the trade reduction effect induced by tariffs. However, results show that elements linked to information-related costs and consumer preferences matter a great deal in explaining the magnitude of border effects. These findings have implications for the economic and welfare-related significance of national borders. Copyright (c) 2008 The Authors. Journal compilation (c) 2008 The Agricultural Economics Society.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

Volume (Year): 59 (2008)
Issue (Month): 3 (09)
Pages: 436-462

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Handle: RePEc:bla:jageco:v:59:y:2008:i:3:p:436-462

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Cited by:
  1. Ihle, Rico & von Cramon-Taubadel, Stephan & Zorya, Sergiy, 2010. "Country and border effects in the transmission of maize prices in Eastern Africa: evidence from a semi-parametric regression model," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96184, African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA).
  2. Anne-Célia Disdier & Lionel Fontagné, 2010. "Trade impact of European measures on GMOs condemned by the WTO panel," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(3), pages 495-514, September.
  3. Murat Genç & David Law, 2014. "A Gravity Model of Barriers to Trade in New Zealand," Treasury Working Paper Series 14/05, New Zealand Treasury.
  4. Li, Yuan & Beghin, John C., 2010. "A Meta-Analysis of Estimates of the Impact of Technical Barriers to Trade," Staff General Research Papers 31968, Iowa State University, Department of Economics.
  5. Imre Ferto & Stefan Bojnec, 2012. "EU Enlargement and Agro-Food Export Performance on EU Market Segments," IEHAS Discussion Papers 1206, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  6. Kramb, Marc Christopher & Herrmann, Roland, 2009. "Wie wirken gemeldete SPS-Maßnahmen? Ein Gravitationsmodell des EU-Rindfleischhandels," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 58(4).
  7. Clas Eriksson, 2011. "Home bias in preferences and the political economics of agricultural protection," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(1), pages 5-23.
  8. Pascal L. Ghazalian, 2012. "Home Bias in Primary Agricultural and Processed Food Trade: Assessing the Effects of National Degree of Uncertainty Aversion," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(2), pages 265-290, 06.

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