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Endogenous transportation costs

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  • Asturias, Jose

Abstract

Quantitative trade models used to evaluate the effects of policy changes have largely abstracted away from modeling the transportation industry. This paper extends a standard Armington trade model to incorporate an oligopolistically competitive transportation industry in which shippers endogenously choose a transportation technology. I collect detailed data on the containerized maritime transportation industry to calibrate the parameters of the model. I then conduct quantitative experiments in which there is a symmetric increase in tariffs. On average, changes in transportation costs account for almost half of the changes in welfare. These findings suggest that the endogeneity of transportation costs is an important mechanism determining the welfare effects of such a policy change.

Suggested Citation

  • Asturias, Jose, 2020. "Endogenous transportation costs," European Economic Review, Elsevier, vol. 123(C).
    • Handle: RePEc:eee:eecrev:v:123:y:2020:i:c:s0014292119302272
    DOI: 10.1016/j.euroecorev.2019.103366
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    4. Ardelean,Adina Teodora & Lugovskyy,Volodymyr & Skiba,Alexandre & Terner,David Michael, 2022. "Fathoming Shipping Costs : An Exploration of Recent Literature, Data, and Patterns," Policy Research Working Paper Series 9992, The World Bank.
    5. Lall,Somik V. & Sinha Roy,Sutirtha & Shilpi,Forhad J., 2022. "Trucking Costs and the Margins of Internal Trade : Evidence from a Trucking Portal in India," Policy Research Working Paper Series 10059, The World Bank.
    6. Zheng, Han & Fujii, Daisuke, 2021. "Nonlinear Pricing in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-112, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    7. Brooks, Leah & Gendron-Carrier, Nicolas & Rua, Gisela, 2021. "The local impact of containerization," Journal of Urban Economics, Elsevier, vol. 126(C).
    8. Dias, Lucas & Haddad, Eduardo & Maggi, Andrés, 2020. "Optimal Road Network and the Gains from Intranational Trade," TD NEREUS 15-2020, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    9. 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.
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    More about this item

    Keywords

    Trade costs; Transportation costs; Trade liberalization;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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