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Why Do Nations Trade (So Little)?

Author

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  • James E. Anderson

    (Boston College)

Abstract

There isn't nearly as much trade as standard models suggest there should be. Formal trade barriers and transport costs are too low to account for the difference. The pattern of missing trade has interesting variation across country pairs. These clues suggest the need for theoretical and eventually structural empirical work on the missing transactions costs. This paper reviews recent empirical findings and some promising research directions in search, predation and contract theory.

Suggested Citation

  • James E. Anderson, 1999. "Why Do Nations Trade (So Little)?," Boston College Working Papers in Economics 428, Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:428
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    File URL: http://fmwww.bc.edu/EC-P/wp428.pdf
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    References listed on IDEAS

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    Cited by:

    1. Frank A.G. den Butter & Raphie Hayat, 0000. "Trade between China and the Netherlands: a Case Study of Globalization," Tinbergen Institute Discussion Papers 08-016/3, Tinbergen Institute.
    2. Noussair, C.N. & Plott, C. & Riezman, R., 2007. "Production, trade and exchange rates in large experimental economies," Other publications TiSEM 3bf683fe-0650-4e8a-8682-c, Tilburg University, School of Economics and Management.
    3. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    4. Koeniger, Winfried, 2002. "Defensive Innovations," IZA Discussion Papers 454, Institute of Labor Economics (IZA).
    5. Jiří Schwarz, 2012. "Impact of institutions on cross-border price dispersion," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(4), pages 617-645, December.
    6. Baltagi, Badi H. & Egger, Peter & Pfaffermayr, Michael, 2007. "Estimating models of complex FDI: Are there third-country effects?," Journal of Econometrics, Elsevier, vol. 140(1), pages 260-281, September.
    7. Marjit, Sugata & Mandal, Biswajit, 2009. "General Trading Costs in Pure Theory of International Trade," MPRA Paper 19290, University Library of Munich, Germany.
    8. Maureen Lankhuizen & Henri L. F. de Groot & Gert‐Jan M. Linders, 2011. "The Trade‐Off between Foreign Direct Investments and Exports: The Role of Multiple Dimensions of Distance," The World Economy, Wiley Blackwell, vol. 34(8), pages 1395-1416, August.
    9. Gert-Jan Linders, 2004. "The Effect of Domestic Institutions on International Trade Flows: A sectoral analysis," ERSA conference papers ersa04p357, European Regional Science Association.
    10. Howard J. Wall, 2000. "Gravity model specification and the effects of the Canada-U.S. border," Working Papers 2000-024, Federal Reserve Bank of St. Louis.
    11. Mr. Enzo Croce & Mr. V. Hugo Juan-Ramon & Mr. Feng Zhu, 2004. "Performance of Western Hemisphere Trading Blocs: A Cost-Corrected Gravity Approach," IMF Working Papers 2004/109, International Monetary Fund.
    12. Shu Yu & Jakob de Haan & Sjoerd Beugelsdijk & Jakob de Haan, 2011. "Trade, Trust and Institutions," CESifo Working Paper Series 3571, CESifo.
    13. Enrico Spolaore, 2004. "Economic Integration, International Conflict and Political Unions," Rivista di Politica Economica, SIPI Spa, vol. 94(5), pages 3-50, September.

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    More about this item

    Keywords

    trade costs; gravity;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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