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TITLE:
Why Do Nations Trade (So Little)?

AUTHOR(S):
James E. Anderson , Boston College

DOCUMENT TYPE: Article

ABSTRACT:
There isn't nearly as much trade as standard models suggest there should be. Formal trade barriers and transport costs are too low to account for the difference. The pattern of missing trade has interesting variation across country pairs. These clues suggest the need for theoretical and eventually structural empirical work on the missing transactions costs. This paper reviews recent empirical findings and some promising research directions in search, predation and contract theory.