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Sorting It Out: Technical Barriers to Trade and Industry Productivity

  • Felbermayr, Gabriel
  • Jung, Benjamin

Trade economists traditionally study the effect of lower variable trade costs. While increasingly important politically, technical barriers to trade (TBTs) have received less attention. Viewing TBTs as fixed regulatory costs related to the entry into export markets, we use a model with heterogeneous firms, trade in differentiated goods, and variable external economies of scale to sort out the rich interactions between TBT reform, input diversity, firm-level productivity, and aggregate productivity. We calibrate the model for 14 industries in order to clarify the theoretical ambiguities. Overall, our results tend to suggest beneficial effects of TBT reform but also reveal interesting sectoral variation.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 20575.

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Date of creation: 2011
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Publication status: Published in Open Economies Review 1 22(2011): pp. 93-117
Handle: RePEc:lmu:muenar:20575
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