Exports, Technical Measures, and Regulatory Heterogeneity

This paper examines the trade effects of dissimilar technical measures between countries. When a company faces different regulations in different markets, its costs can increase from meeting a wider range of requirements and potentially from its inability to exploit economies of scale. We employ firm-level trade data from Chile to estimate the trade impacts of regulatory heterogeneity at various firm margins. We separate the trade impacts between broad classes of technical measures. The results indicate that regulatory heterogeneity is negatively associated with exports. The impacts are observed on both, the extensive and the intensive margins of exports. There are heterogeneous effects depending on the size of the firms with small firms being disproportionately affected from dissimilar technical measures. We also find that the impact of heterogeneity on conformity assessment requirements is no less important, and potentially more important, than the impact of heterogeneity on production requirements.