Indirect Transportation Cost in the border crossing process: The United States–Mexico trade

Abstract

Using a Social Accounting Matrix as database, a Computable General Equilibrium model is implemented in order to estimate the Indirect Transportations Costs (ITC) present in the border crossing for the U.S.–Mexico bilateral trade. Here, an “iceberg–type” transportation function is assumed to determine the amount of loss that must be faced as a result of border crossing process through the ports of entry existing between the two countries. The study period covers annual data from 1995 to 2009 allowing the analysis of the trend of these costs considering the trade liberalisation that is experienced. Results show that the ITC have experienced a decrease of 12% during the period.Test