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Why Do Trade Costs Vary?

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Author Info
Richard Pomfret () (School of Economics, University of Adelaide)
Patricia Sourd in

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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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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/tradecostsAUWP.pdf
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File Function: First version, 23 May 2008
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Paper provided by University of Adelaide, School of Economics in its series Working Papers with number 2008-08.

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Date of creation: Sep 2008
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Handle: RePEc:adl:wpaper:2008-08

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  1. Ricardo J Sánchez & Jan Hoffmann & Alejandro Micco & Georgina V Pizzolitto & Martín Sgut & Gordon Wilmsmeier, 2003. "Port Efficiency and International Trade: Port Efficiency as a Determinant of Maritime Transport Costs," Maritime Economics and Logistics, Palgrave Macmillan Journals, vol. 5(2), pages 199-218, June. [Downloadable!] (restricted)
  2. Wilmsmeier, Gordon & Hoffmann, Jan & Sanchez, Ricardo J., 2006. "The Impact of Port Characteristics on International Maritime Transport Costs," Research in Transportation Economics, Elsevier, vol. 16(1), pages 117-140, January. [Downloadable!] (restricted)
  3. Arvis, Jean-Francois & Raballand, Gael & Marteau, Jean-Francois, 2007. "The cost of being landlocked : logistics costs and supply chain reliability," Policy Research Working Paper Series 4258, The World Bank. [Downloadable!]
  4. David Hummels & Volodymyr Lugovskyy & Alexandre Skiba, 2007. "The Trade Reducing Effects of Market Power in International Shipping," NBER Working Papers 12914, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. David Hummels & Volodymyr Lugovskyy, 2006. "Are Matched Partner Trade Statistics a Usable Measure of Transportation Costs?," Review of International Economics, Blackwell Publishing, vol. 14(1), pages 69-86, 02. [Downloadable!] (restricted)
  6. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-46, December. [Downloadable!] (restricted)
  7. Andres, Luis & Cuberes, David & Diouf, Mame Astou & Serebrisky, Tomas, 2007. "Diffusion of the internet : a cross-country analysis," Policy Research Working Paper Series 4420, The World Bank. [Downloadable!]
  8. Hillberry, Russell & Hummels, David, 2008. "Trade responses to geographic frictions: A decomposition using micro-data," European Economic Review, Elsevier, vol. 52(3), pages 527-550, April. [Downloadable!] (restricted)
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  9. Julia Devlin & Peter Yee, 2005. "Trade Logistics in Developing Countries: The Case of the Middle East and North Africa," The World Economy, Blackwell Publishing, vol. 28(3), pages 435-456, 03. [Downloadable!] (restricted)
  10. Markusen, James R. & Venables, Anthony J., 2007. "Interacting factor endowments and trade costs: A multi-country, multi-good approach to trade theory," Journal of International Economics, Elsevier, vol. 73(2), pages 333-354, November. [Downloadable!] (restricted)
  11. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March. [Downloadable!]
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  12. Clark, Ximena & Dollar, David & Micco, Alejandro, 2004. "Port efficiency, maritime transport costs, and bilateral trade," Journal of Development Economics, Elsevier, vol. 75(2), pages 417-450, December. [Downloadable!] (restricted)
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  13. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank. [Downloadable!]
  14. Berthelon, Matias & Freund, Caroline, 2008. "On the conservation of distance in international trade," Journal of International Economics, Elsevier, vol. 75(2), pages 310-320, July. [Downloadable!] (restricted)
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