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Why do trade costs vary?

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  • Richard Pomfret

    ()

  • Patricia Sourdin

    ()

Abstract

Trade theorists and policymakers have until recently ignored trade costs, but as tariffs have fallen it is apparent that trade costs are a significant obstacle to trade and they are not simply determined by geography or commodity characteristics. We analyse country-by-country variations in trade costs using disaggregated Australian import data. In Australia average trade costs are about 5% of the value of imports, compared to an average tariff of under 4%. Controlling for distance from Australia and the bulkiness of commodities, the paper examines other determinants of international trade costs in terms of exporting country characteristics. Country-specific characteristics which influence the size of trade costs may provide a direct link between institutions and economic growth.

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Bibliographic Info

Article provided by Springer in its journal Review of World Economics.

Volume (Year): 146 (2010)
Issue (Month): 4 (December)
Pages: 709-730

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Handle: RePEc:spr:weltar:v:146:y:2010:i:4:p:709-730

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Related research

Keywords: Trade costs; Trade facilitation; F10; F13; O24;

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References

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Citations

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Cited by:
  1. Edmond, Chris & Midrigan, Virgiliu & Xu, Daniel Yi, 2013. "Competition, Markups, and the Gains from International Trade," Economics Series 299, Institute for Advanced Studies.
  2. Yuko Imura, 2013. "Endogenous Trade Participation with Incomplete Exchange Rate Pass-Through," Working Papers 13-30, Bank of Canada.
  3. Oleg Itskhoki, 2013. "Importers, Exporters, and Exchange Rate Disconnect," 2013 Meeting Papers 1130, Society for Economic Dynamics.
  4. Joern Kleinert & Julia Spies, 2011. "Endogenous Transport Costs in International Trade," IAW Discussion Papers 74, Institut für Angewandte Wirtschaftsforschung (IAW).
  5. Gee Hee Hong & Nicholas Li, 2013. "Market Structure and Cost Pass-Through in Retail," Working Papers 13-5, Bank of Canada.
  6. Bianka Dettmer & Andreas Freytag & Peter Draper, 2013. "Check-in, departure and arrival times: Air cargo in Southern Africa?," Jena Economic Research Papers 2013-018, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  7. Julia Spies & Joern Kleinert, 2011. "Transport Costs in International Trade," ERSA conference papers ersa11p625, European Regional Science Association.
  8. Lewis, Logan T., 2014. "Menu Costs, Trade Flows, and Exchange Rate Volatility," International Finance Discussion Papers 1102, Board of Governors of the Federal Reserve System (U.S.).
  9. Georgios Gerasimou, 2013. "A Behavioural Model of Choice in the Presence of Decision Conflict," Discussion Paper Series, Department of Economics 201302, Department of Economics, University of St. Andrews.
  10. Nicholas Li & Gee Hee Hong, 2013. "Market Structure and Cost Pass-Through in Retail," Working Papers tecipa-470, University of Toronto, Department of Economics.
  11. Pomfret, Richard & Sourdin, Patricia, 2009. "Have Asian trade agreements reduced trade costs?," Journal of Asian Economics, Elsevier, vol. 20(3), pages 255-268, May.
  12. Murat Genç & David Law, 2014. "A Gravity Model of Barriers to Trade in New Zealand," Treasury Working Paper Series 14/05, New Zealand Treasury.
  13. Gita Gopinath & Oleg Itskhoki, 2010. "In Search of Real Rigidities," NBER Working Papers 16065, National Bureau of Economic Research, Inc.
  14. Richard Pomfret & Patricia Sourdin, 2010. "Trade Facilitation And The Measurement Of Trade Costs," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 145-163.

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