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Backfiring with backhaul problems

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  • Ishikawa, Jota
  • Tarui, Nori

Abstract

Trade barriers due to transport costs are as large as those due to tariffs. This paper incorporates the transport sector into a standard model of international trade and studies the effects of trade and industrial policies. Transport firms need to commit to a shipping capacity sufficient for a round trip, with a possible imbalance of shipping volumes in two directions. This imbalance is known as the “backhaul problem.” As transport firms attempt to avoid this problem, a tariff in one sector may affect other independent import and/or export sectors. In particular, domestic tariffs may backfire: domestic exports may also decrease, harming domestic export sectors and the domestic economy. This finding contributes to the literature on how import liberalization may generate a positive effect on the liberalizing country's exports by identifying a new channel through endogenous changes in transport costs given the backhaul problem.

Suggested Citation

  • Ishikawa, Jota & Tarui, Nori, 2018. "Backfiring with backhaul problems," Journal of International Economics, Elsevier, vol. 111(C), pages 81-98.
    • Handle: RePEc:eee:inecon:v:111:y:2018:i:c:p:81-98
    DOI: 10.1016/j.jinteco.2017.12.004
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    2. HIGASHIDA Keisaku & ISHIKAWA Jota & TARUI Nori, 2021. "Carrying Carbon? Negative and Positive Carbon Leakage with International Transport," Discussion papers 21102, Research Institute of Economy, Trade and Industry (RIETI).
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    5. Kanehara, Daishoku & Kamei, Keita, 2019. "Transport Price, Product Differentiation and R&D in an Oligopoly," MPRA Paper 93148, University Library of Munich, Germany.
    6. Zheng, Han, 2022. "Price Discrimination in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-123, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    7. Hayakawa, Kazunobu & Ishikawa, Jota & Tarui, Nori, 2020. "What goes around comes around: Export-enhancing effects of import-tariff reductions," Journal of International Economics, Elsevier, vol. 126(C).
    8. Lutz Kilian & Nikos Nomikos & Xiaoqing Zhou, 2023. "Container Trade and the U.S. Recovery," International Journal of Central Banking, International Journal of Central Banking, vol. 19(1), pages 417-450, March.
    9. Ardelean, Adina & Lugovskyy, Volodymyr, 2023. "It Pays to be big: Price discrimination in maritime shipping," European Economic Review, Elsevier, vol. 153(C).
    10. John Gilbert & Onur A. Koska & Reza Oladi, 2022. "International trade, differentiated goods, and strategic asymmetry," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 1178-1198, January.
    11. Wei, Shang-Jin & Lee, Jungho & Xu, Jianhuan, 2021. "The Welfare Cost of a Current Account Imbalance: A 'Clean' Channel," CEPR Discussion Papers 15805, C.E.P.R. Discussion Papers.
    12. Kazuhiro Takauchi & Tomomichi Mizuno, 2022. "Endogenous transport price, R&D spillovers, and trade," The World Economy, Wiley Blackwell, vol. 45(5), pages 1477-1500, May.
    13. Asturias, Jose, 2020. "Endogenous transportation costs," European Economic Review, Elsevier, vol. 123(C).
    14. Kazuhiro Takauchi & Tomomichi Mizuno, 2019. "Is competition in the transport industry bad?A welfare analysis of R&D with inter-regional transportation," Discussion Papers 1910, Graduate School of Economics, Kobe University.
    15. Dominik Boddin & Frank Stähler, 2018. "The Organization of International Trade," CESifo Working Paper Series 7378, CESifo.
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    18. John Gilbert & Onur A. Koska & Reza Oladi, 2020. "Product Quality and Strategic Asymmetry in International Trade," Working Papers in Economics 20/05, University of Canterbury, Department of Economics and Finance.
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    21. Charlotte Emlinger & Amélie Guillin, "undated". "Cheaper and Faster: The Role of Air Services Agreements on Transportation," Working Papers 2023-17, CEPII research center.

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    More about this item

    Keywords

    Transport sector; Transport cost; Backhaul problems; International shipping; Tariffs;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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