Information matters: A theoretical comparison of some cross-border trade barriers

Chris M. Wilson

Information Economics and Policy, 2016, vol. 37, issue C, 52-60

Abstract: There is widespread evidence that geographical borders reduce trade. This paper presents a theoretical model capable of providing a succinct comparison of three broad forms of trade barriers involving i) trade costs, ii) localized tastes, and iii) information frictions. Despite being traditionally under-researched, it provides the stark finding that information frictions often generate the relatively more powerful marginal effect in reducing cross-border trade, and associated levels of welfare. This result remains robust under a number of extensions that further document the roles of product differentiation and alternative forms of trade costs.

Keywords: Information frictions; Search costs; Trade costs; Localized tastes; Product differentiation (search for similar items in EconPapers)
JEL-codes: D83 F10 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167624516301123
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:iepoli:v:37:y:2016:i:c:p:52-60

DOI: 10.1016/j.infoecopol.2016.10.002

Access Statistics for this article

Information Economics and Policy is currently edited by D. Waterman

More articles in Information Economics and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().