Abstract
This chapter is concerned with an analysis of trade costs with respect to the country size classification developed in Chap. 3 and membership of trade blocs, based upon the E45 data set. First, trade costs are calculated from the gravity equation and the results displayed according to size of countries classification and trade bloc membership. Second, the elasticity of preference substitution is calculated according to size classification and trade bloc membership. Third and closing the chapter is an extensive counterfactual general equilibrium investigation of the impact of changes in the trade costs consequent upon size classification of countries and EU membership using alternative market structure assumptions of perfect and imperfect competition.
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Snorrason, S.T. (2012). An Empirical Analysis of the Impact of Trade Costs on Trade Flows and Welfare: Country Size and PTA Implications. In: Asymmetric Economic Integration. Contributions to Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2861-0_4
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