Please use this identifier to cite or link to this item: http://hdl.handle.net/2440/62833
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Type: Journal article
Title: Why do trade costs vary?
Author: Pomfret, R.
Sourdin, P.
Citation: Review of World Economics, 2010; 146(4):709-730
Publisher: Springer-Verlag
Issue Date: 2010
ISSN: 1610-2878
1610-2886
Statement of
Responsibility: 
Richard Pomfret and Patricia Sourdin
Abstract: As tariffs have fallen, it is apparent that trade costs are a significant obstacle to international trade and that they vary from country to country. The gap between the cif and fob value of a trade flow is a useful measure of aggregate trade costs, but only if the measure is based on a consistent volume of trade; mirror statistics are unsuitable. Using high quality Australian import data disaggregated at the HS 6-digit level, we find large country-by-country variations in trade costs. Distance, weight and size account for part of the variation in trade costs. Indicators of institutional quality pick up some of the variation in trade costs, but the relationship is not uniform across mode of transport and commodities; exporting countries’ institutional quality is more strongly related to trade costs for air freight than sea freight, and the relationship is commodity-specific and strongest for manufactured goods. Country-specific characteristics influencing trade costs provide a link between institutions and economic development.
Keywords: Trade costs; Trade facilitation
Rights: © Kiel Institute 2010
RMID: 0020101827
DOI: 10.1007/s10290-010-0072-8
Appears in Collections:Economics publications

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