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Why Do Trade Costs Vary?

  • Richard Pomfret

    ()

    (School of Economics, University of Adelaide)

  • Patricia Sourdin

    ()

    (School of Economics, University of Adelaide)

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/wp2008-08.pdf
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Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2008-08.

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Length: 40 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:adl:wpaper:2008-08
Contact details of provider: Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/

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