Revisiting the impact of per‐unit duties on agricultural export prices

Abstract

AbstractWe replicate the findings of Emlinger and Guimbardr (ERAE, 2021) on the heterogeneous effects of per‐unit tariffs on trade patterns for developed and developing countries. Analyzing import and export data from 2001 to 2013, they confirm the Alchian‐Allen conjecture that per‐unit trade costs induce higher export unit values. However, the effects are more pronounced for developed country exporters. Understanding the effects of per‐unit trade costs vis‐a‐vis ad valorem tariffs is important to level the playing field of trade negotiations that involve pricing and non‐pricing policies. We extend the original study with data for 191 exporting (190 importing) countries, and 670 HS6 digit products, covering the period 2001–2019 period. The general findings of the original study hold, with remarkable differences. First, using a data set that is constructed in a replicable way and introducing highly relevant bilateral fixed effects reduce effect sizes and the level of statistical significance. Second, the Alchian‐Allen effect is not clearly separated by the economic development dimension of the exporter, but rather dependent on the price levels of the traded goods. These results have important policy implications as they call for deeper investigation of countries' industrial structures of exports to better shape the international debate on trade negotiations.