Estimating the impact of transport efficiency on trade costs: Evidence from Chinese agricultural traders

Abstract

Using a unique survey data on agricultural traders in China in 2004, this study provides direct evidence on significance of interregional transport costs and their key determinants. Our major findings are as follows: (1) the trade barriers within China are dominated by transport-related costs but not artificial barriers, approximated by tolls and fines; (2) Labor and fuels costs are the most significant component of transport costs; (3) road quality is very important for transportation efficiency. Our results indicate that if increasing transport speed by 1 km per hour now, the fuel costs and total direct transportation costs for Chinese traders would reduce by 1.3% and 0.7% respectively.Transportation Costs, China, Agricultural Traders, Infrastructure, International Relations/Trade,