Working Paper: NBER ID: w9485
Authors: Edgar Cudmore; John Whalley
Abstract: Delays at the border for customs clearance are seemingly a central feature of the trade regime in the CIS states. Here, we argue that with queuing costs being endogenously determined in such circumstances tariff liberalization (even in the small economy case) can be welfare worsening since tariff revenues are replaced by resource using queuing costs. On the other hand, corruption can be welfare improving if queuing costs are replaced by resource transferring bribes. We also show how added distortions between perishable and non-perishable, or between light and heavy goods can also arise. We show these outcomes using a simple general equilibrium model, and explore the numerical implications using Russian data. The orders of magnitude are both significant and opposite in sign to conventional analyses.
Keywords: No keywords provided
JEL Codes: F1; D5; P3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Border delays (F55) | Increased queuing costs (L90) |
| Increased queuing costs (L90) | Welfare (I38) |
| Tariff liberalization (F13) | Lower tariff revenues (H29) |
| Tariff liberalization (F13) | Increased queuing costs (L90) |
| Tariff liberalization (F13) | Welfare (I38) |
| Corruption (D73) | Queuing costs (L90) |
| Queuing costs (L90) | Resource allocation (D45) |
| Perishability (L15) | Adverse effects of queuing (C22) |