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Backfiring with backhaul problems: Trade and Industrial Policies with Endogenous Transport Costs

Author

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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 explicitly incorporates the transport sector into the framework of international oligopoly 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. Because of this "backhaul problem", trade restrictions may backfire: domestic import restrictions may also decrease domestic exports, possibly harming domestic firms and benefiting foreign firms. In addition, trade policy in one sector may affect other independent sectors.

Suggested Citation

  • ISHIKAWA, Jota & TARUI, Nori, 2015. "Backfiring with backhaul problems: Trade and Industrial Policies with Endogenous Transport Costs," Discussion paper series HIAS-E-12, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
  • Handle: RePEc:hit:hiasdp:hias-e-12
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. ISHIKAWA, Jota & TARUI, Norio, 2017. "Backfiring with Backhaul Problems: Trade and Industrial Policies with Endogenous Transport Costs," Discussion paper series HIAS-E-57, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    2. Giulia Brancaccio & Myrto Kalouptsidi & Theodore Papageorgiou, 2017. "Geography, Search Frictions and Endogenous Trade Costs," NBER Working Papers 23581, National Bureau of Economic Research, Inc.
    3. repec:eee:inecon:v:111:y:2018:i:c:p:81-98 is not listed on IDEAS
    4. Takauchi, Kazuhiro, 2016. "Profit-reducing fixed-price contract: The role of the transport sector," MPRA Paper 71413, University Library of Munich, Germany.
    5. Takauchi, Kazuhiro, 2015. "Transport efficiency, downstream R&D, and spillovers," MPRA Paper 68479, University Library of Munich, Germany.
    6. repec:taf:marpmg:v:44:y:2017:i:6:p:761-778 is not listed on IDEAS
    7. Kazuhiro Takauchi & Tomomichi Mizuno, 2017. "Solving a hold-up problem may harm all firms: downstream R&D and transport-price contracts," Discussion Papers 1707, Graduate School of Economics, Kobe University.
    8. repec:pal:marecl:v:20:y:2018:i:2:d:10.1057_s41278-016-0004-1 is not listed on IDEAS

    More about this item

    Keywords

    Transport firm; transport cost; trade policy; industrial policy; international oligopoly;

    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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