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Factor Content of Bilateral Trade: The Role of Firm Heterogeneity and Transaction Costs

d'Artis Kancs and Pavel Ciaian

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: In this paper we study the determinants of the factor content of the CEE agricultural trade. Examining empirically three hypothesis, which relate cross-country differences in technology, relative factor abundance and transaction costs and market imperfections to the factor content of trade we find that the first two hypotheses are confirmed by the majority of developed EU countries, but rejected by roughly one half of the CEE transition country pairs. Second, we find that when accounting for transaction costs of farm (re)organization, both hypotheses are confirmed by the majority of the CEE country pairs. These findings provide empirical evidence of market imperfections, and particularly, of transaction costs of farm (re)organization in the CEE.

Keywords: Factor content; bilateral trade; relative factor abundance; technological differences; agriculture; transaction costs (search for similar items in EconPapers)
JEL-codes: F12 F14 D23 Q12 Q17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Date: 2009
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http://www.econ.kuleuven.be/licos/publications/dp/dp238.pdf

Related works:
Journal Article: Factor content of bilateral trade: the role of firm heterogeneity and transaction costs (2010) Downloads
Working Paper: Factor Content of Agricultural Trade: The Role of Firm Heterogeneity and Transaction Costs (2009) Downloads
Working Paper: Factor Content of Agricultural Trade (2008) Downloads
Working Paper: Factor Content of Agricultural Trade (2008) Downloads
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