CONTRACT ENFORCEMENT AND INTERNATIONAL TRADE

Priya Ranjan and Jae Young Lee
Authors registered in the RePEc Author Service: Priyaranjan Jha

Economics and Politics, 2007, vol. 19, issue 2, 191-218

Abstract: This paper derives estimating equations from a model where individuals consume two classes of goods, and the degree of contract enforcement affects the transaction cost of trade in the two classes of goods differentially. Empirically, using Rauch's classification, internationally traded goods are classified into differentiated goods and those possessing a reference price, with the presumption that contract enforcement issues are more important for the former. It is verified that the measures of contract enforcement affect the volume of trade in both types of goods, but the impact is larger for differentiated goods.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:19:y:2007:i:2:p:191-218

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