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Customs-Related Transaction Costs, Firm Size and International Trade Intensity

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Author Info
Verwaal, E.
Donkers, A.C.D. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)

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Abstract

The costs of paperwork and delays needed to clear international customs are generally perceived as a time-consuming impediment to international trade. However, few studies have empirically examined the determinants and the impact of this type of government-imposed transaction costs. This paper analyses the role of firm size as a determinant of customs-related transaction costs, as well as the effect of firm size on the relationship between these costs and the international trade intensity of firms. We submit that economies of scale should be related to the size of the activities the firm is specialised in, and not directly linked to the size of a firm per se. The results of this study indicate that customs-related transaction costs repress international trade activities of firms, even at low levels of these costs. The paper identifies transaction-related economies of scale, simplified customs procedures and advanced information and communication technology as main determinants of customs-related transaction costs. When these factors are taken into account, firm size has no effect on customs-related transaction costs. Policy implications are considered for firm strategy and public policy.

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File URL: http://hdl.handle.net/1765/78
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Publisher Info
Paper provided by Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam. in its series Research Paper with number ERS-2001-13-MKT Revision_Date: 2009-07-29.

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Date of creation: 26 Feb 2001
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Handle: RePEc:dgr:eureri:200172

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Web page: http://www.erim.eur.nl/

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Related research
Keywords: firm size; international trade intensity; trade barriers; international business strategy;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Wagner, Joachim, 1995. " Exports, Firm Size, and Firm Dynamics," Small Business Economics, Springer, vol. 7(1), pages 29-39, February.
  2. Maurice Obstfeld & Kenneth Rogoff, 2000. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Working Papers 7777, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Roper, Stephen, 1999. " Modelling Small Business Growth and Profitability," Small Business Economics, Springer, vol. 13(3), pages 235-52, November. [Downloadable!] (restricted)
    Other versions:
  4. Hudson, John & Godwin, Michael, 2000. "The compliance costs of collecting direct tax in the UK:: An analysis of PAYE and National Insurance," Journal of Public Economics, Elsevier, vol. 77(1), pages 29-44, July. [Downloadable!] (restricted)
  5. Nooteboom, Bart, 1993. " Firm Size Effects on Transaction Costs," Small Business Economics, Springer, vol. 5(4), pages 283-95, December.
  6. Andrea Bonaccorsi, 1992. "On the Relationship Between Firm Size and Export Intensity," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 23(4), pages 605-635, December. [Downloadable!] (restricted)
  7. Lenn Gomes & Kannan Ramaswamy, 1999. "An Empirical Examination of the Form of the Relationship Between Multinationality and Performance," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 30(1), pages 173-187, March. [Downloadable!] (restricted)
  8. Leonidas C Leonidou & Constatine S Katsikeas, 1996. "The Export Development Process: An Integrative Review of Empirical Models," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 27(3), pages 517-551, September. [Downloadable!] (restricted)
  9. Marsha Blumenthal & Joel Slemrod, 1995. "The compliance cost of taxing foreign-source income: Its magnitude, determinants, and policy implications," International Tax and Public Finance, Springer, vol. 2(1), pages 37-53, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Peter Walkenhorst & Tadashi Yasui, 2004. "Quantitative Assessment of the Benefits of Trade Facilitation," International Trade 0401008, EconWPA. [Downloadable!]
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