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Administrative Barriers and the Lumpiness of Trade

  • Cecília Hornok
  • Miklós Koren

We document that administrative trade costs of per shipment nature (documentation, customs clearance and inspection) lead to less frequent and larger-sized shipments, i.e., more lumpiness, in international trade. We build a model where consumers have heterogeneous preferences for the arrival time of a non-storable product and firms compete by selecting the time of their shipment. Per shipment costs reduce shipment frequency, increase the shipment size and the product price and lead to welfare losses. We provide empirical evidence for these effects on detailed export data from the US and Spain. We find that US and Spanish exporters send fewer and larger shipments to countries with higher administrative barriers. However, we find no robust evidence that such destination would command higher prices.

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Paper provided by Department of Economics, Central European University in its series CEU Working Papers with number 2012_6.

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Date of creation: 01 Sep 2011
Date of revision: 01 Sep 2011
Handle: RePEc:ceu:econwp:2012_6
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  1. Carolyn Evans & James Harrigan, 2003. "Distance, time, and specialization," International Finance Discussion Papers 766, Board of Governors of the Federal Reserve System (U.S.).
  2. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
  3. Irarrazabal, Alfonso & Moxnes, Andreas & Opromolla, Luca David, 2010. "The Tip of the Iceberg: Modeling Trade Costs and Implications for Intra-Industry Reallocation," CEPR Discussion Papers 7685, C.E.P.R. Discussion Papers.
  4. Cecília Hornok, 2011. "Need for Speed: Is Faster Trade in the EU Trade-Creating?," wiiw Working Papers 75, The Vienna Institute for International Economic Studies, wiiw.
  5. Roc Armenter & Mikl?s Koren, 2014. "A Balls-and-Bins Model of Trade," American Economic Review, American Economic Association, vol. 104(7), pages 2127-51, July.
  6. Joseph Francois & Hans Van Meijl & Frank Van Tongeren, 2005. "Trade liberalization in the Doha Development Round," Economic Policy, CEPR;CES;MSH, vol. 20(42), pages 349-391, 04.
  7. Michael Engman, 2005. "The Economic Impact of Trade Facilitation," OECD Trade Policy Papers 21, OECD Publishing.
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