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A Passage to India: Quantifying Internal and External Barriers to Trade
| Content Provider | Semantic Scholar |
|---|---|
| Author | Leemput, Eva Van |
| Copyright Year | 2016 |
| Abstract | This paper quantifies the size of internal versus external trade barriers and assesses the impact on trade and welfare. I develop a quantitative multi-sector international trade model featuring nonhomothetic preferences in which states trade both domestically and internationally. I discipline the model using rich micro data on price dispersion as well as foreign and domestic trade flows at the Indian state level. I find that (1) state-based price data predict internal trade flows well; (2) internal trade barriers make up 40% of the total trade cost on average, but vary substantially by state depending on the distance to the closest port; and (3) the welfare impacts of domestic integration are substantial: reducing trade barriers across states to the U.S. level increases welfare by more (13%) than fully eliminating international import barriers (7%). |
| Starting Page | 1 |
| Ending Page | 65 |
| Page Count | 65 |
| File Format | PDF HTM / HTML |
| DOI | 10.17016/IFDP.2016.1185 |
| Alternate Webpage(s) | https://www.federalreserve.gov/econresdata/ifdp/2016/files/ifdp1185.pdf |
| Alternate Webpage(s) | https://doi.org/10.17016/IFDP.2016.1185 |
| Volume Number | 2016 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
