Trade Costs
Abstract
This paper surveys the measurement of trade costs: what we know and don't know but may usefully attempt to learn. Partial and incomplete data on direct measures of costs go with inference on implicit costs from trade flows and prices. Total trade costs in rich countries are large. The ad valorem tax equivalent is about 170 percent when pushing the data hard. Poor countries face even higher trade costs. There is a lot of variation across countries and across goods within countries, much of which makes economic sense. In our survey, theory provides interpretation and perspective and suggests improvements for the future. Some new results are presented to properly apply and interpret gravity theory and handle aggregation.
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Equation (1) holds for each individual industry in the sample due to the separability property of the structural gravity model.
“Due to the separability property of the structural gravity model, Equation (1) holds for each individual industry in our sample, compare, Anderson and van Wincoop (2004) and Costinot et al. (2012).”
From Quantifying the partial and general equilibrium effects of sanctions on Russia (2024) · cites this paper as Anderson and van Wincoop (2004)
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- Authors
- Anderson, J. E., & van Wincoop, E.
- Affiliations
- Boston College (US)
- University of Virginia and NBER.
- ORCID
- Anderson, James E
- Venue
- Journal of Economic Literature
- Publisher
- American Economic Association
- Published
- 2004-08-01
- Volume
- 42
- Issue
- 3
- Pages
- 691-751
- ISSN
- 0022-0515 (ISSN-L)
- OpenAlex
- W4249920418
- Cited by
- 2,524
- References
- 55
- Citations by year
- 2026: 152 · 2025: 147 · 2024: 130 · 2023: 142 · 2022: 152 · 2021: 133 · 2020: 128 · 2019: 97 · 2018: 115 · 2017: 123 · 2016: 126 · 2015: 112 · 2014: 120 · 2013: 106 · 2012: 120
- FWCI
- 117.73
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of Economic Literature (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Social Sciences › Business, Management and Accounting › Strategy and Management › Global Trade and Competitiveness
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Technological Innovation
- Keywords
- trade costs, gravity model, aggregation, cross-national variation, low-income countries, international trade flows, price
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