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A passage to India: Quantifying internal and external barriers to trade

Eva Van Leemput ()

Journal of International Economics, 2021, vol. 131, issue C

Abstract: This paper quantifies the size of internal versus external trade barriers and assesses the trade and welfare impact. I develop a quantitative two-sector international trade model featuring nonhomothetic preferences in which Indian states trade both domestically and internationally. I discipline the model using rich data on price dispersion together with state-based foreign and domestic trade flows. I find that (1) internal trade barriers make up 40% of total trade barriers on average, but vary substantially by state depending on the distance to the closest port; and (2) reducing trade barriers across Indian states to the United States level increases welfare more (13%) than removing international import barriers (7%).

Keywords: Internal and external trade barriers; Welfare; India (search for similar items in EconPapers)
JEL-codes: F13 F14 O18 O24 (search for similar items in EconPapers)
Date: 2021
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Working Paper: A Passage to India: Quantifying Internal and External Barriers to Trade (2016) Downloads
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DOI: 10.1016/j.jinteco.2021.103473

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