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

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  • Verwaal, Ernst
  • Donkers, Bas

Abstract

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. 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. It is shown that 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. Copyright 2003 by Kluwer Academic Publishers

Suggested Citation

  • Verwaal, Ernst & Donkers, Bas, 2003. "Customs-Related Transaction Costs, Firm Size and International Trade Intensity," Small Business Economics, Springer, vol. 21(3), pages 257-271, November.
  • Handle: RePEc:kap:sbusec:v:21:y:2003:i:3:p:257-71
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    References listed on IDEAS

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    1. Cedric Sandford, 1981. "Book Review: Costs and Benefits of VAT," Fiscal Studies, Institute for Fiscal Studies, pages 61-62.
    2. 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;Academy of International Business, pages 173-187.
    3. Leonidas C Leonidou & Constatine S Katsikeas, 1996. "The Export Development Process: An Integrative Review of Empirical Models," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, pages 517-551.
    4. Jonathan L Calof, 1994. "The Relationship Between Firm Size and Export Behavior Revisited," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, pages 367-387.
    5. 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;International Institute of Public Finance, vol. 2(1), pages 37-53, February.
    6. Andrea Bonaccorsi, 1992. "On the Relationship Between Firm Size and Export Intensity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, pages 605-635.
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    Citations

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    Cited by:

    1. Giovanna Magnani & Antonella Zucchella & Dinorà Eliete Floriani, 2015. "Relativity and asymmetry in distance. The role of strategic distance in the internationalization decisions of Brazilian and Italian firms," DEM Working Papers Series 111, University of Pavia, Department of Economics and Management.
    2. Roberto Miranda, 2012. "Central American Economic Integration - The Impact of a Customs Union with Guatemala on El Salvador’s Economy," Competence Centre on Money, Trade, Finance and Development 1208, Hochschule fuer Technik und Wirtschaft, Berlin.
    3. Mario Holzner & Florin Peci, 2011. "The Impact of Customs Procedures on Business Performance: Evidence from Kosovo," wiiw Working Papers 76, The Vienna Institute for International Economic Studies, wiiw.
    4. Ueki, Yasushi, 2014. "Trade obstacles, inventory level of inputs, and internationalization of enterprise activities : a comparison between Southeast Asia and Latin America," IDE Discussion Papers 474, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    5. repec:eee:iburev:v:27:y:2018:i:1:p:1-20 is not listed on IDEAS
    6. Yang, Jie, 2014. "Supply chain agility: Securing performance for Chinese manufacturers," International Journal of Production Economics, Elsevier, vol. 150(C), pages 104-113.
    7. Halit Yanikkaya & Zeynep Aktas Koral, 2017. "Assessing the Determinants of Customs-Related Transaction Costs in Turkey," Working Papers 2017-02, Gebze Technical University, Department of Economics.
    8. Peter Walkenhorst & Tadashi Yasui, 2004. "Quantitative Assessment of the Benefits of Trade Facilitation," International Trade 0401008, EconWPA.

    More about this item

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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