Delays at the border for customs clearance are seemingly a central feature of the trade regime in the CIS states. Here, we argue that with queuing costs being endogenously determined in such circumstances tariff liberalization (even in the small economy case) can be welfare worsening since tariff revenues are replaced by resource using queuing costs. On the other hand, corruption can be welfare improving if queuing costs are replaced by resource transferring bribes. We also show how added distortions between perishable and non-perishable, or between light and heavy goods can also arise. We show these outcomes using a simple general equilibrium model, and explore the numerical implications using Russian data. The orders of magnitude are both significant and opposite in sign to conventional analyses.
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Length: Date of creation: 2002 Date of revision: Handle: RePEc:uwo:epuwoc:20026
Contact details of provider: Postal: RBC Financial Group Economic Policy Research Institute, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2 Phone: 519-661-2111 Ext.85228 Web page: http://economics.uwo.ca/econref/WorkingPapers/
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Edgar Cudmore & John Whalley, 2005.
"Border Delays and Trade Liberalization,"
NBER Chapters,
in: International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14, pages 391-406
National Bureau of Economic Research, Inc.
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Find related papers by JEL classification: F1 - International Economics - - Trade D5 - Microeconomics - - General Equilibrium and Disequilibrium P3 - Economic Systems - - Socialist Institutions and Their Transitions
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