Border Delays and Trade Liberalization

Edgar Cudmore () and John Whalley

No 20026, University of Western Ontario, Economic Policy Research Institute Working Papers from University of Western Ontario, Economic Policy Research Institute

Abstract: Delays at the border for customs clearance are seemingly a central feature of the trade regime in the CIS states. Here, we argue that with queuing costs being endogenously determined in such circumstances tariff liberalization (even in the small economy case) can be welfare worsening since tariff revenues are replaced by resource using queuing costs. On the other hand, corruption can be welfare improving if queuing costs are replaced by resource transferring bribes. We also show how added distortions between perishable and non-perishable, or between light and heavy goods can also arise. We show these outcomes using a simple general equilibrium model, and explore the numerical implications using Russian data. The orders of magnitude are both significant and opposite in sign to conventional analyses.

Keywords: border delays; trade; queuing; general equilibrium (search for similar items in EconPapers)
JEL-codes: D5 F1 P3 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (8)

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