Customs-Related Transaction Costs, Firm Size and International Trade Intensity

Posted: 24 Nov 2009

See all articles by Ernst Verwaal

Ernst Verwaal

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship; Queen's University Management School; Erasmus Research Institute of Management (ERIM)

Bas Donkers

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM); Tinbergen Institute

Date Written: 2003

Abstract

The purpose of this study is to examine the role of firm size as a determinant of government-imposed, customs-related transaction costs (such as delays and the paperwork needed for customs clearance).Another purpose is to assess the impact that firm size has on the relationship between these costs and firms' international trade intensity. Following a description of the customs procedures for import and export transactions in the European Union, it is hypothesized that a higher frequency of international transactions, as well as larger transaction sizes, will result in lower customs-related transaction costs.Other hypotheses predict that reducing the frequency with which transaction declarations are filed and integrating computerized business information systems will reduce costs.The hypotheses regarding firm size predicts that size will have no independent effect on costs but that the impact of these costs on international trade intensity will be smaller for larger firms. A model that relates firm traits to customs-related transaction costs, along with data from a survey of 642 international traders in The Netherlands, was used to test these hypotheses.Although the data support most of the hypotheses, they reveal that the interaction between firm size and transaction costs has virtually no effect on the international trade intensity of a firm.The main determinants of customs-related costs, then, include transaction-related economies of scale, the use of simplified customs procedures, and the use of advanced information and communication technology. (SAA)

Keywords: Customs-related costs, Customs laws, International trade, Firm size, Exports & imports, Public policies, Economic theory, Transaction costs

Suggested Citation

Verwaal, Ernst and Donkers, Bas, Customs-Related Transaction Costs, Firm Size and International Trade Intensity (2003). Small Business Economics, Vol. 21, Issue 3, p. 257-271 2003. Available at SSRN: https://ssrn.com/abstract=1511040

Ernst Verwaal (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship ( email )

RSM Erasmus University
Rotterdam, 3000 DR
Netherlands

Queen's University Management School ( email )

25 University Square
Belfast
United Kingdom

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Bas Donkers

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
Rotterdam, NL 3000 DR
Netherlands
+31 10 408 2411 (Phone)
+31 10 408 9169 (Fax)

HOME PAGE: http://https://www.eur.nl/en/people/bas-donkers

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 408 2411 (Phone)
+31 10 408 9169 (Fax)

HOME PAGE: http://https://www.eur.nl/en/people/bas-donkers

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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