Bilateral tariff rates in international trade: finished goods versus intermediate goods

Kazunobu Hayakawa

No 304, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: In this paper, we examined back-and-forth international transactions through tariff reduction by estimating modified gravity equations for finished goods and intermediate goods separately. Our main findings are as follows. Exports of finished machinery products are negatively associated with not only the importer's tariff rates on finished machinery products but also the exporter's tariff rates on machinery parts. Similarly, exports of machinery parts are negatively associated with not only the importer's tariff rates on machinery parts but also the exporter's tariff rates on finished machinery products. These results imply that tariff reduction in only one production process in an industry has the potential to drastically change the magnitude of trade in the whole industry.

Keywords: International trade; Tariff; Gravity; Finished Goods Trade; Intermediate Goods Trade (search for similar items in EconPapers)
JEL-codes: F10 F14 F15 (search for similar items in EconPapers)
Date: 2011-08-01
New Economics Papers: this item is included in nep-int
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 304. 2011-08-01

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Journal Article: Bilateral tariff rates in international trade: finished goods versus intermediate goods (2014)
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