TY  - JOUR
AU  - Fisman,Raymond
AU  - Moustakerski,Peter
AU  - Wei,Shang-Jin
TI  - Outsourcing Tariff Evasion: A New Explanation for Entrepot Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12818
PY  - 2007
Y2  - January 2007
UR  - http://www.nber.org/papers/w12818
L1  - http://www.nber.org/papers/w12818.pdf
N1  - Author contact info:
Raymond Fisman
School of Business
Columbia University
622 Uris Hall
3022 Broadway
New York, NY 10027
Tel: 212/854-9157
Fax: 212-316-9219
E-Mail: rf250@columbia.edu

Peter Moustakerski
Booz Allen Hamilton
E-Mail: moustakerski_peter@bah.com

Shang-Jin Wei
Graduate School of Business
Columbia University
Uris Hall, Room 619
3022 Broadway
New York, NY 10027-6902
Tel: 212/854-9139
E-Mail: shangjin.wei@columbia.edu
AB  - Traditional explanations for indirect trade through an entrepot have focused on savings in transport costs and on the role of specialized agents in processing and distribution. We provide an alternative perspective based on the possibility that entrepots may facilitate tariff evasion. Using data on direct exports to mainland China and indirect exports via Hong Kong SAR, we find that the indirect export rate rises with the Chinese tariff rate, even though there is no legal tax advantage to sending goods via Hong Kong SAR. We undertake a number of extensions to rule out plausible alternative hypotheses based on existing explanations for entrepot trade.
ER  -