Let' s Try Next Door: Technical Barriers to Trade and Multi-destination Firms

Lionel Fontagné (1, 2, 3) , Gianluca Orefice (3)

1 PSE - Paris School of Economics
2 CES - Centre d'économie de la Sorbonne
3 CEPII - Centre d'Etudes Prospectives et d'Informations Internationales

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.

Mots clés: Non-tariff Measures; TBT; Multi-destination Firms; Trade Margins

Domaines: Economies et finances

Lionel Fontagné, Gianluca Orefice. Let' s Try Next Door: Technical Barriers to Trade and Multi-destination Firms. 2016. ⟨hal-01476545⟩