The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs

Alfonso Irarrazabal (), Andreas Moxnes and Luca David Opromolla
Additional contact information
Alfonso Irarrazabal: BI Norwegian School of Economics

The Review of Economics and Statistics, 2015, vol. 97, issue 4, 777-792

Abstract: Trade costs are often additive. Well-known examples are quotas, per unit tariffs, and, in part, transportation costs. In spite of this, we have no broad and systematic evidence of the magnitude of these costs. In this paper, we develop a new empirical framework for estimating additive trade costs from standard firm-level trade data. Our results suggest that additive barriers are on average 14%, expressed relative to the median price. The point estimates are strongly correlated with common proxies for trade costs. Using our microestimates, we show that an additive import tariff reduces welfare and trade by more than an equal-yield multiplicative tariff.

Keywords: Trade Costs; Heterogeneous Firms; Exports (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (111)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00517 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs (2013)
Working Paper: The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs (2011)
Working Paper: The Tip of the Iceberg: Modeling Trade Costs and Implications for Intra-Industry Reallocation (2010)
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:tpr:restat:v:97:y:2015:i:4:p:777-792

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().