GEOGRAPHY, TRANSPORTATION, AND ENDOGENOUS TRADE COSTS

In this paper, we study the role of the transportation sector in world trade. We build a spatial model that centers on the interaction of the market for (oceanic) transportation services and the market for world trade in goods. The model delivers equilibrium trade flows, as well as equilibrium trade...

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Veröffentlicht in:Econometrica 2020-03, Vol.88 (2), p.657-691
Hauptverfasser: Brancaccio, Giulia, Kalouptsidi, Myrto, Papageorgiou, Theodore
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creator Brancaccio, Giulia
Kalouptsidi, Myrto
Papageorgiou, Theodore
description In this paper, we study the role of the transportation sector in world trade. We build a spatial model that centers on the interaction of the market for (oceanic) transportation services and the market for world trade in goods. The model delivers equilibrium trade flows, as well as equilibrium trade costs (shipping prices). Using detailed data on vessel movements and shipping prices, we document novel facts about shipping patterns; we then flexibly estimate our model. We use this setup to demonstrate that the transportation sector (i) attenuates differences in the comparative advantage across countries; (ii) generates network effects in trade costs; and (iii) dampens the impact of shocks on trade flows. These three mechanisms reveal a new role for geography in international trade that was previously concealed by the frequently-used assumption of exogenous trade costs. Finally, we illustrate how our setup can be used for policy analysis by evaluating the impact of future and existing infrastructure projects (e.g., Northwest Passage, Panama Canal).
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source Wiley Online Library; JSTOR; JSTOR Mathematics & Statistics Collection
subjects Comparative studies
Endogenous
Equilibrium
Geography
import‐export complementarity
Infrastructure
International trade
maritime infrastructure
matching function estimation
network effects
Policy analysis
Prices
shipping
Shipping industry
trade costs
trade elasticity
Trade flows
trade imbalances
Transportation
Transportation industry
Transportation services
title GEOGRAPHY, TRANSPORTATION, AND ENDOGENOUS TRADE COSTS
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