Let' s Try Next Door: Technical Barriers to Trade and Multi-destination Firms
Résumé
Highlights Stringent TBTs drive the average firm out of the market with a magnified effect for multi-destination players, who are encouraged to redirect their exports to other destinations (free of TBT concerns). Multi-destination firms are more likely to exit as a response to a stringent TBT. Thus, the imposition of a stringent TBT, by pushing multi-destination (high-productive) firms out of the market, reduces the average productivity of incumbent firms (i.e. the welfare of the imposing country). We combine aggregate estimations at sector-destination level with firm-level estimations and find that stringent TBTs represent mainly increases in fixed (more than variable) trade costs, with trade elasticity magnified for more homogeneous sectors.
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relationship_isVariantFormatOf hal-01665840 Article Lionel Fontagné, Gianluca Orefice. Let’s try next door: Technical Barriers to Trade and multi-destination firms. European Economic Review, 2018, 101, pp.643-663. ⟨10.1016/j.euroecorev.2017.11.002⟩. ⟨hal-01665840⟩