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Administrative barriers to trade
Title / Series / Name
Journal of International Economics
Publication Volume
96
Publication Issue
Pages
Authors
Editors
Keywords
Administrative barriers
Trade facilitation
Customs union
Gravity equation
Trade facilitation
Customs union
Gravity equation
URI
http://hdl.handle.net/20.500.14018/14101
Abstract
We build a model of administrative barriers to trade to understand how they affect trade volumes, shipping decisions and welfare. Because administrative costs are incurred with every shipment, exporters have to decide how to break up total trade into individual shipments. Consumers value frequent shipments, because they enable them to consume close to their preferred dates. Hence per-shipment costs create a welfare loss. We derive a gravity equation in our model and show that administrative costs can be expressed as bilateral ad-valorem trade costs. We estimate the ad-valorem equivalent in Spanish shipment-level export data and find it to be large. A 50% reduction in per-shipment costs is equivalent to a 9 percentage point reduction in tariffs. Our model and estimates help explain why policy makers emphasize trade facilitation and why trade within customs unions is larger than trade within free trade areas.
Topic
Publisher
Place of Publication
Type
Journal article
Date
2015
Language
ISBN
Identifiers
10.1016/j.jinteco.2015.01.002