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CONTRACT ENFORCEMENT AND INTERNATIONAL TRADE
Author(s) -
RANJAN PRIYA,
LEE JAE YOUNG
Publication year - 2007
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.2007.00308.x
Subject(s) - presumption , enforcement , database transaction , economics , transaction cost , microeconomics , business , commerce , international trade , law , computer science , political science , programming language
This paper derives estimating equations from a model where individuals consume two classes of goods, and the degree of contract enforcement affects the transaction cost of trade in the two classes of goods differentially. Empirically, using Rauch's classification, internationally traded goods are classified into differentiated goods and those possessing a reference price, with the presumption that contract enforcement issues are more important for the former. It is verified that the measures of contract enforcement affect the volume of trade in both types of goods, but the impact is larger for differentiated goods.