I develop a model of agriculture on heterogeneous land to study the relation between trade, productivity, and welfare in Peru, where farmers face high internal and external trade costs. I quantify the model with new data on crop prices, yields, and land allocations. I then measure the effects of changes to trade opportunities. A policy of paving roads raises aggregate productivity (4.9%) and the median farmer’s welfare (2.7%), but increased competition from remote suppliers harms 20% of farmers. An increase in international grain prices spreads unevenly across regions, benefiting farmers but hurting urban consumers close to ports.
Van Leemput, Eva, 2021. "A passage to India: Quantifying internal and external barriers to trade," Journal of International Economics, Elsevier, vol. 131(C).
Kala Krishna & Yelena Sheveleva, 2017. "Wheat or Strawberries? Intermediated Trade with Limited Contracting," American Economic Journal: Microeconomics, American Economic Association, vol. 9(3), pages 28-62, August.
Kala Krishna & Lena Sheveleva, 2014. "Wheat or Strawberries? Intermediated Trade with Limited Contracting," NBER Working Papers 20630, National Bureau of Economic Research, Inc.
Porteous, Obie C., 2015. "High Trade Costs and Their Consequences: An Estimated Model of African Agricultural Storage and Trade," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205776, Agricultural and Applied Economics Association.
repec:nbr:nberch:13946 is not listed on IDEAS