Technical Barriers to Trade and the Performance of Indian Exporters

Pavel Chakraborty and Rahul Singh
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Pavel Chakraborty: Department of Economics, Management School, Lancaster University

No DP-2021-26, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: We study the effects of technical barriers to trade (TBTs) imposed by destination markets on prices, marginal costs, and markups of Indian manufacturing exporters. Using detailed firm-product-level data on prices and production from PROWESS, we first identify the underlying component of prices (i.e. marginal costs and markups), and use those as our outcomes of interest in the second stage. We find that (i) introduction of TBTs by importing countries increases marginal costs by 5% and prices by 4%, (ii) there is considerable heterogeneity based on exporters’ initial productivity, (iii) productive exporters (those belonging to the lower deciles) experienced an increase in marginal costs and decrease in markups compared to low productivity exporters, and (iv) overall effects are driven by private firms (both domestic and foreign) belonging to intermediate input industries.

Keywords: technical barriers to trade; prices; marginal costs; markups; exporters (search for similar items in EconPapers)
JEL-codes: F1 F14 F16 (search for similar items in EconPapers)
Date: 2021-08-04
New Economics Papers: this item is included in nep-bec, nep-cwa, nep-eff, nep-int and nep-isf
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